IMF: Pakistan has been given time till February 9, only if they agree to these terms, the agreement will be signed.
Fighting for a handful of food in Pakistan. Photo: PTI
Islamabad: Pakistan is in extreme financial crisis. There is no foreign currency in the country's treasury. Due to lack of money, extreme food crisis has also occurred in the country. He was forced to approach the International Monetary Fund in hopes of a loan. The IMF had a meeting with Pakistan this week. Still further discussion. In the meantime, the conditions that the IMF has asked Pakistan to fulfill for the loan in the first round of talks will turn heads. Pakistan's Prime Minister Shahbaz Sharif also said that it is very difficult to meet the conditions set by the IMF to get a loan of millions of rupees. But the country has no alternative. But will Pakistan really accept all the conditions?
Gross financial mismanagement, fiscal malaise, unplanned borrowing and investment, corruption—multiple reasons are behind Pakistan's woes. Neighboring countries are so heavily indebted that no country is willing to lend again. In this situation, Pakistan's only hope is the International Monetary Fund or IMF-E. However, Pakistan will have to struggle to fulfill the conditions set by the IMF before giving the loan.
Let's take a look at what the conditions have been imposed by the IMF-
- After 9 reviews of Pakistan's financial situation and economy, the IMF agreed to give a loan of 1.1 billion dollars. After receiving this loan, Pakistan can also seek loans from other countries and international organizations. But before lending, the IMF wants Pakistan to increase government revenue. For this, the IMF has also created a macro-economic framework. Pakistan has been given time till February 9, only if they agree to these conditions, the agreement will be signed.
- Government of Pakistan has a huge revenue deficit. The main condition of the IMF is that Pakistan must first meet this fiscal deficit.
- For this, it has been suggested to increase the price of petroleum by Tk 20 to Tk 30 per litre. Currently, the price of petroleum in Pakistan is Rs. 50 per liter. If the conditions of the IMF are met, its price will reach 70 to 80 taka.
- The IMF has also suggested 17 percent Goods and Services Tax or GST on petroleum, mineral oil and lubricants. If this condition is not agreed, the Ordinance has been issued to increase GST by 1 percent on all goods.
Pakistan may also increase duty on sugary liquid drinks. The duty on liquid beverages may be increased from 13 percent to 17 percent by presenting the mini budget.
A tax hike has also been suggested on cigarettes.
The IMF also suggested reviewing the amount of assets held by government employees. Later, the IMF may advise government employees, especially those who are paid heavily, to cut their salaries.
Earlier, the IMF had asked Pakistan to reduce the foreign exchange reserve rate in the open market. Following the advice to reduce the rate, the price of Pakistani currency also fell drastically.