Govt is ready to fulfill IMF’s tough conditions thru mini-budget

The draft and preparations of the expected mini-budget have entered in the final stage as the imported government has agreed to fulfill the tough conditions of the International Monetary Fund (IMF) before its review mission’s arrival in Pakistan.

According to the reports, additional duty tax is being proposed, about Rs70 billion tax exemption is being withdrawn, imposition of withholding tax on banking transactions of non-filers is being proposed, suggestions regarding revenue measures have been sent to the Ministry of Finance, sources said.

They said that the imposition of withholding tax on the daily transactions of over Rs50000 being also proposed but the tax will not be applicable to active tax payers.

Rs45 to Rs50 billion withholding tax was being estimated whereas levy on petroleum products could be imposed. 30 per cent increase in gas tariff was expected. The rates of electricity for different consumers is expected to increase. All measures would be implemented from February 1, sources said.

On 22 January, Executive Director of the Sustainable Development Policy Institute (SDPI), Dr Abid Qaiyum Suleri, while speaking at a seminar, said that the economic crisis in Pakistan had been exacerbated due to the global crisis of inflation and that accepting the International Monitory Fund (IMF), despite its strict conditions, is vital.

“Currently, inflation in Pakistan stands at 24.5% which is why accepting the IMF’s strict conditions is vital for our cashflow and economic stability,” said Suleri.

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He said that during the past few years, Pakistan had managed to sail through intensifying geo-political tensions – now, however, the future developments seem concerning.

“Loans, even those offered by friendly countries, have become conditional to securing the next IMF instalment,” he said, adding that, “Political forces in Pakistan have realised that, despite its tough conditions, engaging with the IMF is a must and taking unpopular decisions is going to be inevitable.”

He stressed on the importance of supporting the government in reviving the IMF programme saying that demonising the IMF, and other international finance partners, will not benefit anyone.

Referring to the recent international financing pledges, he said, “We cannot rely on the pledges to shore up our foreign exchange reserves. The government needs to strengthen social protection to cushion the lower income segments during this economic crisis.”

Stressing on the need to achieve political stability, Joint Executive Director of the SDPI Dr Vaqar Ahmed said, “The lenders only want assurances for the repayment of long-term loans when the economy is undermined by political strife in the country.”

Speaking at the occasion, Assistant Professor at Habib University, Dr Aqdas Afzal warned that by agreeing to the IMF’s conditions, the country will only avert the immediate crisis. “The storm is not over yet,” he said.