KARACHI: The demand for withdrawal of fuel subsidy and increase in power tariff is “catastrophic and damaging” as it will crush millions of households as well as traders and industrial units, according to an economic and financial analyst.
The trade deficit would expand massively due to increase in cost of production and challenges of competitiveness would lead to difficulty in meeting export orders, said analyst Ateeq-ur-Rehman.
Pakistan’s foreign exchange reserves have dropped to a critical level. Therefore, the country is depending on roll-over loans to cover its imports and tackle the balance of payment crisis.
The country has approached the International Monetary Fund (IMF) for revival of the 7th trench of $1 billion under its $6 billion extended fund facility, said Mr Rehman.
“We understand that Pakistan’s continued financial crisis is acute but the IMF has shared a list of their stringent five conditions for continuation of the bailout package,” he said. “The conditions are withdrawal of fuel subsidy, doing away with amnesty scheme, increasing power tariff, taking additional taxation measures and reduction in the development programme.”
He described the conditions as “severe and dictation-like” and urged the economic managers to convince the IMF to release $1 billion, which would act as a “parachute” for Pakistan to come out of its problems and in moving towards a stable economy.
If the demands are met, the cost of even pharmaceuticals products, such as life-saving medicines, would shoot up and the common man would face difficulty in reaching them.
Mr Rehman requested the IMF and the World Bank to revisit their conditions, and make them softer and more accessible.
Copyright Business Recorder, 2022
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