Will Pakistan Be Able To Complete IMF Programme?
The International Monetary Fund (IMF) Executive Board has approved $6 billion 39-month Extended Fund Facility (EFF) arrangement for Pakistan. The government circles are claiming that it will help the country tackle the current economic challenges.
The cash-starved country has already received assistance [some stated to be grants but these are overwhelmingly loans] from Saudi Arabia, Qatar, China and the United Arab Emirates, while it is eyeing more loans from the World Bank and the Asian Development Bank.
So the question is: how it will solve our problems given that there is no investment? Won’t it further complicate debt servicing which already consumes the biggest chunk of our national budget? Who will create employment opportunities in the absence of domestic and foreign investment?
But wait! We should forget about new investments and jobs as the existing big and smaller units are closing down, leaving hundreds of thousands jobless. With the ever-increasing cost of doing business thanks to higher utilities’ tariffs and devaluation, managing the existing businesses has become a herculean task.
Hence, new investment seems to be a far-fetched joke when even the government ministers do not ever mention it despite holding at over half-a-dozen press conferences daily.
And all of this happened thanks to the IMF agreement that carries a long list of conditions which are already damaging the economy and the people.
Also read: IMF Approved USD 6 Billion Loan. But Can Pakistan Meet Revenue Target To Service The Debt?
Meanwhile, the main question has not been discussed yet. What are the chances of government meeting the revenue targets for 2019-20? How will it collect Rs5.5 trillion in revenue when the economy isn’t expanding? Will the government further burden the commoners and the industries through measures like increasing the power and gas rates? If yes then how can one expect economic activity as enhancing the cost of doing business is not favourable to both the producers and the consumers?
Talking to NayaDaur Media, prominent economist Dr Akmal Hussain said the government won’t be able to meet the revenue targets when growth has slowed down, interest rate is increasing and development expenditure reduced to a level which is now around half when compared to the government of Zulfikar Ali Bhutto.
According to Dr Akmal, revenue collection around the world is improved by ensuring higher growth but it is totally opposite in Pakistan’s case, as the policymakers here are focusing on revenue generation instead of growth.
Regarding the business opportunities, he gave the example of 17.5 per cent sales tax on textile mills which has been rejected by the owners. How they can sell their products to buyers [traders in this case] when these are too expensive, Dr Akmal said.
He said the condition of providing CNIC numbers of buyers further made it impossible for the textile mill owners, as the non-filer traders won’t buy the products.
Dr Akmal cited a study which covered 120 countries opting for the IMF programmes and said the findings showed that the IMF neither achieved economic sterilisation nor growth. The IMF’s claims about growth in the long-term have no basis, he added.
Similarly, Fahd Ali – Professor of Economics at ITU, Lahore – told NayaDaur Media that the government doesn’t have any growth strategy and there is no chance of documentation of economy amid the economic crisis where there is no growth and expansion.
Fahd also feared that the government might withdraw from the IMF programme before its completion. Negative effects of the programme and very little time for showing performance to the people before the elections, in case it is completed, are the reasons he cited for his opinion.