IMF’s another bitter prescription

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PEOPLE of Pakistan are already crying hard under the burden of economic measures that the government was forced to take under pressure of the International Monetary Fund (IMF) but the Fund is still not satisfied and latest reports suggest it is demanding of the government to take more harsh steps to qualify for the receipt of the next tranche.

It proposes a coercive rate of income tax on the salaried class and opposes the relief package given by the Prime Minister to offset, to some extent, the impact of inflation on different segments of the society.

It has also serious objections to disbursement of loans under Kamyab Pakistan Programme (KPP).

This is surely yet another prescription for disaster for the common man in the country and that is why the opposition has warned that it would scrap the agreement with the IMF.

The proposal to tax the upper middle and rich income groups, who earn in the range of Rs 104,000 to Rs 1 million a month, at a single rate of 30% and those below this threshold at the rate of 20% is simply mischievous as it is an attempt to take back what the Government provided to the salaried class during the last three and a half years.

Presently, pension income is exempt from tax but the IMF also wants it to be taxed either at the contribution stage or at the withdrawal stage.

While proposing these measures, the IMF has ignored the reality that salaries and pensions are disbursed not in dollars but in rupee, which has lost about 50% of its value forcing people to compromise their standard of living.

It may also be pointed out that inflation in Pakistan stood at 12.3% in February 2022, which is the highest in South Asia and one of the highest in the world.

Under these circumstances, jacking up of the income tax rate would play havoc with the family budgets of the majority of people, making their lives miserable.

The objection of the IMF to the relief package of the Prime Minister also deserves to be rejected as most of the woes of the present government have their origin in implementation of the measures proposed by the IMF, which added to the burden of the common man but contributed almost nothing to improvement of economic conditions of the people.

The liberal exchange policy adopted by the government at the instance of the IMF is rightly considered to be the prime reason behind unprecedented price-hike in the country.

Prices of everything including services have skyrocketed but the policy has not helped boost exports as was originally claimed by the policy-makers.

Again, the government is already spending very little in the name of development but the overall developmental allocations have been slashed by Rs 200 billion for the ongoing year and there is pressure to reduce it further.

It is time for our economic managers to go for out-of-box solutions to address economic challenges of the country, saying goodbye to IMF clutches.

 

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