Leading economists say: Govt will be unable to implement ‘harsh’ IMF conditions

ISLAMABAD: The government will be unable to implement the very harsh conditions, including taxation and other measures agreed with the International Monetary Fund (IMF), under revival of EFF programme.

This was stated by Dr Salman Shah while talking to Business Recorder on phone. He pointed out that implementing these conditions would be all the more difficult as the government has a very thin majority and some of the coalition partners are opposing the reform agenda.

Shah added that generating a primary surplus means that either the government would have to reduce current expenditure or it has to impose additional taxes. Contingent taxation measures have been agreed and this was acknowledged by the government’s economic team notably that it would be exploring avenues to finance the expenditure which implies additional taxes, he added.

He said that energy sector has become unsustainable and is badly affecting industry and exports due to its increasing cost. Former finance minister said that IMF has raised question marks in the report on the seriousness of those who had been promising reforms with the Fund but failed to implement it.

Former Economic Adviser to finance Ministry Dr Ashfaque Hassan Khan said that this is the most brutal and cruel IMF programme ever given to any country because it has no human face and does not take account of the ground realities of Pakistan especially the devastating flood. The delay of 7th and 8th reviews by the IMF serious damaged Pakistan’s economy.

He said that now the Fund has put a condition of tracking monthly revenue target and in case of shortfall the country would be required to implement additional taxation measures at a time when growth is expected between 2 and 2.5 percent and inflation is very high.

The government is not in a position to take additional taxation measures in the current scenario he said adding that this reflects that the programme was not appropriately negotiated.

Hassan Khan said that all targets of fiscal year 2022-23 have become redundant.

Copyright Business Recorder, 2022