ACCORDING to media reports, the International Monetary Fund (IMF) has informed Pakistani interlocutors that the next bailout package under the Extended Fund Facility (EFF) would only be considered after presenting an aligned upcoming budget and securing its approval from parliament. The global lender wants the Government to demonstrate, through the forthcoming budget for the next financial year, its ability to raise the FBR revenue, throw primary surplus through curtailing expenditure and undertaking structural reforms to restrict the losses of State-owned Enterprises (SOEs). The government will have to hike electricity and gas tariffs in July and August 2024 to strike a deal with the IMF.
It is, indeed, a matter of shame that the country has been pushed into such a messy situation that it finds no escape from the clutches of the IMF and an elected government is unable to prepare and announce a budget in line with the legitimate aspirations of the people. The loss of economic sovereignty is the price that we have paid for unending political instability that has made the country vulnerable in every respect. As the government is understandably keen to get a bailout package as soon as possible, it is anybody’s guess that it will go to any extent to placate the IMF, which will effectively mean no respite for the inflation ridden people, who are expecting some sort of relief in the next budget and measures to spur economic growth. No one can dispute the fact that the country needs to reasonably increase its tax collection and there is also a potential to realize this objective but there is a big question mark on the ability of the government to make those pay who have so far remained sacred cows as far as payment of their tax liabilities are concerned. Traders are adamant not to cooperate in the national campaign to raise domestic resources despite the fact that the programmes so devised require them to pay only a fraction of what they ought to pay as taxes. Lack of writ of the state in this regard could mean the axe of additional taxation measures would fall on the existing and honest taxpayers. Those earning millions are going scot-free but the fixed income groups have become a favourite target as reports suggest the IMF is pressurizing the Government to reduce tax slabs for employees and levy tax on pensions. Similarly, the real estate sector, which is playing an important role in promoting economic activities as it is directly linked to about forty other industries and services, is also burdened with undue and unreasonable taxes as a result of which the poor and the middle class are finding it difficult to realize their dream of owning a house. People of Pakistan have heaved a sigh of relief due to downward trend in food prices but their joy might prove temporary as the government is being asked to jack up further both electricity and gas tariffs, which are already high as compared to other regional countries and as a result not only individual consumers are suffering but our exports have also become uncompetitive in the international market. The world is moving towards alternative energy resources like solar and wind power but here, after an initial euphoria, the government is dropping discouraging signals as far as exploitation of the cheaper and environment friendly solar power is concerned. The plans to jack up both the baseline tariff and fuel/quarterly adjustment charges could spark social unrest as we recently witnessed in Azad Jammu and Kashmir, where the government was forced to revise the power tariff down to the lowest level. As for structural reforms, the government is already undertaking an exercise to determine the ultimate fate of state-owned enterprises and regrettably a decision has also been taken to sell even the profit-earning institutions. It is also regrettable that such critical decisions with far reaching consequences for the future of the country are being made without taking the parliament into confidence.
