Pakistan’s loans cannot be written off or restructured: IMF

International Monitory Fund (IMF) mission in Pakistan chief Jeffrey Frank said the IMF cannot write off or restructure Pakistan’s loan.

While speaking to the media, Frank said Pakistan has not formally sought a new program, adding that if they did want to seek a new program their economic strategy must radically change as losses of government institutions had drowned the current economic strategy.

Frank said Pakistan was in need of billions of dollars in revenue as it was suffering from a current deficit of Rs 16.24 trillion, and Pakistan’s foreign exchange reserves had diminished. He expressed serious concern over the budgetary deficit and said it could reach to Rs 1,624 billion during the current financial year. He said without the agreement of provinces, Pakistan cannot get a new loan and neither can the existing loan will be written off or rescheduled.

He pointed out that provincial governments were part of the financial operation and provinces had a greater role in collection and utilisation of taxes.

He however indicated that if the political leadership of the country expressed its desire, the caretaker government of Pakistan can get loans which would be helpful in making payment of foreign liabilities.

Frank said Pakistan would not be able to achieve the GDP target of 4.5 percent for the current year.

The IMF mission chief also said taxation on agriculture, retail and sales should be made more effective and tax relaxations and concessions should be done away with.

He further said Pakistan’s major issue is power deficiency and power theft was the root cause of the increasing deficit.