Imf Agreements With Pakistan Pdf
Friday, April 9, 2021 in Uncategorized
In addition, the IMF insists on a “market exchange rate.” It is not entirely clear whether this means a scattering of the currency or minimal intervention by the State Bank of Pakistan (SBP). In both cases, the market expects the rupees to depreciate by about 15-20% over the next few months. This is also due to the IMF`s likely push for positive net international reserves to be maintained by the SBP. This means that SBP must build up reserves by buying dollars, which will push up the price of the dollar. In addition, the policy rate announced by SBP is expected to be increased by an additional 150 to 200 basis points. Since the interest rate has increased from about 6% to more than 11% in recent months, it will increase again by 2% to over 13%. As a result, the credit rate will increase to about 15-16%, which will increase the cost of activity, stifle investment for the foreseeable future and lead to a contraction of the economy accompanied by increased unemployment and poverty. It is not as if the Pakistanis do not know what they will do if they go to the IMF. In fact, Imran Khan`s government has tried to avoid the IMF for as long as possible. Although it was clear when Imran Khan took office that Pakistan had to fill a huge balance-of-payments hole (BOP) and get closer to the IMF, the inexperienced and, it turns out, totally incompetent and ignorant, the “khanistas” (Pakistan`s equivalent of Bhakts and Durbaris) were unnecessarily large. Their plan was to fill the BOP gap by seeking help from “friendly” countries. It was believed that Pakistan, if it were able to obtain sufficient funds from its friends, would improve its negotiating position with the IMF, and the conditions would not be as heavy as they would otherwise be. “The next budget for the 2019/20 fiscal year is a decisive first step in the authorities` budgetary strategy.
The budget will reach a primary deficit of 0.6% of GDP, supported by measures to mobilise tax revenues to eliminate tax exemptions, limit special treatments and improve tax administration. This will be accompanied by prudent spending growth, which aims to maintain essential development spending, increase Benazir`s revenue assistance program and improve targeted subsidies, with the aim of protecting the most vulnerable segments of society. “The EFF aims to support the authorities` ambitious programme of macroeconomic and structural reforms over the next three years. These include improving public finances and reducing public debt through fiscal policies and administrative reforms, in order to strengthen revenue mobilization and ensure a fairer and more transparent distribution of the tax burden. At the same time, a comprehensive cost recovery plan in the energy and state-owned enterprises sectors will help eliminate or reduce the quasi-fiscal deficit, which deductes the limited resources of the state. These efforts will create fiscal room for a substantial increase in social spending to strengthen social protection, infrastructure and the development of human capital. Modernizing the public finance management framework will increase transparency and efficiency of spending. The provinces are committed to contributing to this effort by better aligning their budgetary objectives with those of the federal government. It is clear that the IMF is putting the screws on Pakistan. Unlike in the past, where many concessions were made before and during the programmes and the violation of Pakistan`s conditions was lifted, Pakistan is this time forced to meet its obligations before the IMF gives a single dollar.
