When the federal government had agreed to bring changes in the economic system on the asking of the International Monetary Fund (IMF), only then had the IMF had approved a loan of $ 11.30 billion, which was to be received by the federal government in different installments. The conditions of the IMF’s loan directly result in price hike of the services and utilities being provided by the government such as energy, fuel etc. besides the imported goods made available to the masses through the government. A major chunk of the overall inflation rate in the past three years of the elected government can be attributed to the IMF loan conditions.
Given the country’s economic situation, it can be said that the government was compelled to take this serious decision of approaching the IMF, as it was not easy for the present government to bring tax reforms in a fortnight. Moreover, compliance with the IMF condition was also not possible for this government as the portfolio of federal finance minister was given to four different personalities. Under the IMF conditions, the government was supposed to reduce the budget deficit, introduce major tax reforms, bring reforms in banking sectors, cut budget allocation and withdraw various subsidies etc. but only some of this has been done successfully.
With the government’s apathy, the IMF has warned the government and showed a red flag by withholding two installments of the approved loan i.e. $ 3.5 billion. However, the IMF has also given a nine-month extension on the request of the federal government. The purpose of all the IMF conditions is to divert the burden on the economy due to the increase in oil prices and electricity prices by introducing new taxes under the reformed-general sales tax (RGST) and by maximising tax recoveries.
The government has still not complied with the IMF’s conditions despite the fact that the burden of common people has increased over time. It is indeed a quandary as to what hard steps the government is ready to take to deal with the current crunch and placate the IMF and what impact will these steps have on the common man. -Daily Kawish
Translated from the original Sindhi by Aftab Channa
