Awaiting IMF nod


Pakistan is keeping its fingers crossed as talks for a new tranche from the IMF hang in the balance

The protracted negotiations with the Fund in Washington are apparently more technical based

The country’s annual budget swings as a pendulum, as until and unless the proposed statistics are approved by the international lender, the same may hit snags

Primarily, the IMF has reservations over Rs9

5 trillion expenditures proposed in the budget

It believes that the government has set lofty targets, and the revenue generation may not exceed Rs7 trillion

Thus, the gap is cumbersome and, at least, the donor does not want it to be serviced through borrowing

This is where the standoff is and solicits intricate maneuvering to stay afloat

Finance Minister Miftah Ismail, however, is optimistic that the deal would be done, and a $900 million tranche will be released

This succor is indispensable to avoid not only an imminent default, but also turn around the wheel of economy

The timeframe projected is over the weekend, and it seems there is some diplomatic largesse at work on the part of the US to help strike a deal

The barometer at which the deal is struck is anybody’s guess, but the hunch is that the IMF will compel the government to cut down on increase in salaries proposed at 15% and roll back tax exemptions for those earning less than Rs1

2 million annually

The devil, nonetheless, is in the details as more raise in petroleum and energy prices is on the cards

The Fund is unrelenting in any kind of subsidies, and is wary of insulating even the downtrodden in these harsh times

But the minister argues that the IMF has nothing to do with salaries as it depends on the government’s discretion

But one thing is for sure, the $6 billion EFF arrangement signed in July 2019 still has its shadows to cast

Pakistan’s desire to resume disbursements of the stalled package, and also to expand the size and duration of the programme is not being reciprocated, accordingly

This tribulation with the IMF is not new, and we have been here very often

This entails a choreographed and time-barred approach towards the tangibles of Pakistan economy, in order to let it stand on its feet

Published in The Express Tribune, June 22nd, 2022

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Date:23-Jun-2022 Reference:View Original Link