Miftah’s optimism

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AT long last, Minister for Finance and Economic Affairs, Miftah Ismail, has expressed the confidence that an agreement with the International Monetary Fund (IMF) for revival of the stalled programme was in sight.

Replying to questions by reporters in Islamabad after a meeting of the Senate Standing Committee on Finance, he stuck to the previous position of the Government to provide tax relief to those earning Rs 1.2 million annually, also explaining that the IMF has nothing to do with the salaries of the employees as long as the Government has the money to pay.

The optimism expressed by the Minister about conclusion of an accord with the IMF and reiteration of the stand to protect vulnerable segments of the population despite reports about objections by the Fund augur well for the economy.

The talks with the IMF need to be wound up at the soonest in view of negative implications of the delay on the overall economic indicators as is evident from further loss of value by rupee, which crossed Rs.210 a dollar in the Interbank trade.

According to reports, the IMF was pressurizing the Government to withdraw its plan to enhance the tax exemption ceiling to Rs.1.2 million but the Minister’s firm response to the question on the issue indicated the authorities were able to convince the Fund about provision of necessary relief to low and middle income groups.

Similarly, a modest 15% increase in the salaries of the Government employees was, in fact, a peanut in the face of latest wholesale hike in the price of petroleum products and its chain impact on the cost of goods and services.

There is, no doubt, an urgent need to introduce reforms to help stabilize the economy but at the same time an elected Government cannot close its eyes to the plight of fixed income groups and the poor.

Details, of course, would be available after formal signing of the accord with the IMF but there are reports that the Government will have to take some more difficult measures to satisfy the Fund and these steps would be protected in the budget for the next financial years, which is set to be adopted by the National Assembly next week.

One hopes there would be a balance between the need to stabilize the economy and provide much-needed relief to the poor.