The expected negotiations with the IMF at the end of this month to resolve Pakistan's economic woes may be more difficult and patient in the background that the pressure is increasing on the international financial institution to stop new loans from inside and outside Pakistan.

The founder PTI had written a letter to the International Monetary Fund asking that no loan be given to Pakistan until the alleged election rigging is resolved.  Apparently, the IMF did not take notice of this letter but has also supported this demand by emphasizing the need for political stability in Pakistan. At a time when pressure is being put on the IMF from within Pakistan, India is also making negative propaganda against Pakistan.

Perhaps this is why the IMF has expressed concern over Pakistan's growing internal and external debt and low revenue. However, past governments have implemented its strict conditions and raised taxes dramatically, resulting in skyrocketing inflation, rising unemployment and struggling businesses.  The biggest challenge for the newly elected govt is economic recovery. This is a difficult situation. Especially because it has promised to relieve the people from inflation as soon as it assumed power and has also announced assistance to the deserving people under the Ramadan package.  PML-N leader Ahsan Iqbal says that the economy of Pakistan has become hollow. It needs 700 billion rupees just to pay the debts. Despite the difficult decisions and actions, it will take two years for Pakistan to stand on its feet. The Pakistani delegation to the talks with the IMF at the end of March will be led by the new finance minister who is under new thinking and new requirements of the time.  Apart from obtaining the remaining amount of the current package of the IMF, they will also discuss a new package of 6 billion dollars. The new finance minister will have to attend a meeting of the IMF and the World Bank next month and clarify the new government's powers and policy on debt.

According to economists, with the help of friendly countries, Pakistan's outstanding debts will be reduced by the end of this year, but their pressure on the rupee will continue to increase.  This situation calls for wise economic decisions by the government which can be quite difficult due to political instability.  However, there is positive progress in relation to the problems facing the assurance of all kinds of cooperation from the friendly countries in the period of economic difficulties.  China has always helped Pakistan in difficult times and in his congratulatory message to the newly elected President Asif Ali Zardari, the Chinese President has indicated to continue this process. Iran and the Arab countries are also ready to play their role through the relationship of friendship and brotherhood.  If Prime Minister Shehbaz Sharif's government, together with President Asif Zardari, the King of Reconciliation, promotes efforts to make the situation favorable for political stability and implements the agenda announced by the Muslim League-N and the People's Party, the path to economic stability can also be paved.  The newly-elected federal government has taken the reins of the country in the difficult economic conditions, they have actually made this responsibility a bed full of thorns.  The first challenge for the government is to get another loan agreement from the IMF.  How the mountains will have to be crossed for this can be gauged from the demand of the International Monetary Fund to impose 18% GST on various items including food, medicine, petroleum products and stationery, complete abolition of the fifth schedule.  Moreover, the exemptions from restrictions and reduced rates should be removed under the sixth schedule indeed. Experts and analysts say that if all these proposals are accepted, the prices of wheat, rice, pulses, stationery, POL products and many other items will increase further and the vast majority of the country will suffer intolerable difficulties.

Therefore, it is necessary to find alternative ways to increase the financial resources of the government. This task may be difficult but not impossible.  The previous coalition government had a good austerity plan which must now be fully implemented, including provisions for a shortened cabinet and the abolition of elite privileges. Complete elimination of electricity theft, gas theft and tax evasion can be a sure way to provide critical financial resources without burdening the public.

Full or partial privatization of all loss-making public institutions should be done as soon as possible to save national treasury resources. To facilitate tax payment and to prevent tax evasion through the connivance of corrupt elements of the bureaucracy, the entire system should be digitized as in developed countries as soon as possible. The ways of economic improvement can be widened without making the life of the people more difficult.

Meanwhile, the rumor has it that the IMF has rejected the circular debt reduction and tariff reduction plans proposed by the Ministry of Energy. The IMF is not ready to support these projects. While there is no ambiguity on the plan to cut tariffs, there were conflicting reports on the Ministry of Petroleum's plan to cut revolving credit, with the IMF calling for Do More.

Some experts says that the IMF wants reforms to ensure full recovery of electricity bills and no subsidy or discount to anyone. Why does the country's energy crisis never seem to be resolved. Why do people steal electricity and no one catches them. Line losses are also an odd problem. If the transmission lines are not working properly, why is it taking so long to get rid of them completely. The government must be tired by increasing the price of electricity, but the revolving debt is still increasing. But why ? On the other hand, electricity distribution companies send as many bills as they want, no one is asking. It is often heard that the wrong bill was sent to so and so . Another problem is that there are power plants that generate more electricity even in winter and then they are paying the cost of electricity from the public, but no one is ready to talk about how long they will continue to make electricity more expensive for the public.

Published in The Daily National Courier, March, 13 2024

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