IMF and Pakistan: Additional Requirements for Recovery

 

The International Monetary Fund (IMF) has set additional conditions for Pakistan to receive its loan installment, which is aimed at helping the country recover from its economic crisis. IMF and Pakistan's decision comes as the country faces a looming financial crisis, with its economy struggling to cope with the fallout of the COVID-19 pandemic and rising external debt. The IMF's latest requirements are part of a larger reform program aimed at stabilizing Pakistan's economy, reducing its fiscal deficit, and improving its business environment.

IMF and Pakistan: Additional Requirements

One of the key requirements is to reduce Pakistan's fiscal deficit, which currently stands at 8.1% of GDP. The IMF has asked Pakistan to take steps to increase its revenue, including by broadening the tax base and eliminating tax exemptions. The IMF has also urged Pakistan to improve its public financial management by strengthening its budget preparation and execution processes and by introducing reforms to reduce corruption and improve accountability.

Another requirement from the IMF is for Pakistan to reduce its fiscal deficit to 0.6% of GDP by 2023. This is a significant challenge for Pakistan, as its fiscal deficit was 7.1% of GDP in 2020. The IMF has also asked Pakistan to take measures to increase its foreign exchange reserves, which have been steadily declining.

Pakistan's government has announced that it will implement the IMF's additional requirements, but the move is likely to be unpopular with the public. The tax increases and reduction in subsidies are likely to increase the cost of living for Pakistanis, who are already struggling with inflation and high unemployment rates.

The IMF's additional requirements have also been criticized by some experts who argue that they may further harm Pakistan's struggling economy. They argue that tax increases and reductions in subsidies may slow down economic growth and increase poverty.

However, the IMF has defended its additional requirements, stating that they are necessary to help Pakistan's economy recover from its current crisis. The organization has also stated that it will continue to work with Pakistan to ensure that the country is able to meet its economic targets.

Pakistan's economic crisis has been exacerbated by the COVID-19 pandemic, which has had a severe impact on the country's economy. The pandemic has led to a decline in exports, a reduction in remittances from abroad, and a decrease in foreign investment.

The IMF's additional requirements may help Pakistan's economy recover in the long term, but the short-term impact is likely to be difficult for many Pakistanis. The country's government will need to carefully manage the implementation of the IMF's requirements to ensure that the impact on the population is minimized.