The IMF showed mercy on Pakistan which is facing economic crisis and approved a bailout package of 7 billion dollars.
This can give impetus to Pakistan’s economy. The Government of Pakistan has expressed gratitude to the IMF for this 37-month loan program. The
Actually, due to not being able to fulfill the conditions of IMF, Pakistan was yearning for a bailout package for a long time.
Earlier, Pakistan had got a loan in 2022 from the EFF package of 2019. Due to Covid and Russia-Ukraine war, Pakistan’s economy became worse.
In November 2019, IMF gave a loan of $1.18 billion to Pakistan. Whereas in May 2023, the people of Pakistan started craving for food.
Inflation had reached its peak at 38 percent. The prices of food items and oil had started skyrocketing. Pakistan’s foreign reserve was reduced to only 3 billion dollars.
After this, Pakistan started reforms as per the conditions of IMF. After getting help from countries like China, Saudi Arabia and UAE, the inflation rate in Pakistan has become quite controlled in September 2024. This is 7.5 percent which is the lowest in the last five years.
People’s oil will be released as per IMF’s conditions
IMF has definitely given loan to Pakistan, however the conditions are such that it will kill the Pakistani people. IMF has set conditions like 45 percent income tax on agriculture and a huge increase in electricity prices.
7 billion dollars is equal to approximately Rs 58800 crore. This may provide relief to Pakistan for a few days but it is not a permanent cure. Pakistan is continuously getting trapped in the debt trap.
Pakistan trapped in debt trap
Pakistan’s external debt has currently reached 130 billion dollars. Of this, $90 billion is to be paid in the next three years.
IMF has also given a bailout package of 7 billion dollars but it is only for 37 months. Pakistan will have to collect more taxes as per the conditions of IMF which will prove bad for the public.
According to the information, the first installment of the bailout package of $1.1 billion will be released.
This is Pakistan’s 25th IMF program since 1958. There is a sixth extended fund facility. Pakistan will have to give 5 percent loan on this loan. Pakistan has also given credit for this loan to Army Chief Asim Munir.
Pakistan has already increased taxes by Rs 1.8 lakh crore for this IMF package. At the same time, electricity prices have been increased.
IMF’s conditions include privatization of loss-making units and increasing taxes. Apart from this, four provinces will have to increase agricultural income tax rates by October 30.
In such a situation, the agricultural income tax rate will increase from 15 to 45 percent. Subsidy on electricity and gas will also be reduced.
IMF has also said that if tax collection is less then the government will have to increase taxes by bringing a mini budget.
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