KARACHI. Sept 8: Pakistan will resume talks with an international Monetary Fund mission next week on a crucial loan programme that may lead to the rescheduling of some of the country's bilateral debt, a government official said yesterday, reports Reuters.

"An advance (IMF) team is already here, they are doing preparatory work. The head of the mission is due on Saturday." a spokesman of the Ministry of Finance and Economic Affairs division told Reuters by telephone from Islamabad.

He said the team was expected to stay for about two weeks and negotiations for a loan programme would start next week. He did not say what amount Pakistan was seeking.

Finance Minister Shaukat Aziz is in New York as part of Pakistan's delegation to the United Nations Millennium Summit and is due back in Pakistan on Sep- tember 12, after which he will meet the IMF officials.

An IMF loan is seen as an endorsement of the country's economic policies an is crucial in Pakistan's precarious balance of payments situation.

Mansoor All, chief economist at brokerage house Jahangir Siddiqui & Co. said the market would take an IMF loan as a cer-tification of Pakistan's reform programme, lending a degree of stability to the external account.

'The IMFs support Is also essential to Pakistan's effort to reschedule its external debt." he added.

Pakistan's external liabilities are estimated at about $34 billion.

Officials say Islamabad Is looking to reschedule payments on the external debt for the next year after an earlier rescheduling of more than $4.0 billion in early 1999 ends in December.

The key to convincing the IMF

is Islamabad's ability to implement economic and tax reforms, broaden a narrow tax base, impose a general sales tax on the retail sector and document a largely undocumented economy.

Just one per cent of the 138 million population pay any taxes and the size of the unofficial economy is estimated to be the same as the official economy of $60 billion.

The government of military ruler General Pervez Musharraf has launched a survey since May to trace tax evaders and document the economy despite strong resistence from the powerful retail merchants' lobby.

Resolution of a bitter three-year-old row with Hub Power Company Ltd HPWR.KA on tariffs. which the government is seeking, will also help improve Islamabad's relations with multilateral agencies and help restore Investor confidence.