ISLAMABAD – As the government is eyeing another IMF package, the economists have termed the move ‘disastrous’ for the economy and said without implementing economic reforms, taxing the rich, focusing on promoting growth by bringing downing the interest rates, no bail-out package could end the chronic economic problems.
An official source at the Finance Ministry said that the government had decided to inform IMF authorities during the forth coming visit of finance minister to Washington on April 12-14 and that it would require a new bail out programme. The government, he said, even ready wanted that the remaining two tranches of $ 3.4 billion of the currently suspended programme should be included in the new programme.
However, he claimed that the new programme was being sought just to maintain the confidence of international community in Pakistan’s economy. “We are in quite comfortable position as exports are expected to cross $ 25 billion and remittances $ 11 billion during the current financial year.”
However, economists have opposed the government’s move as they were of the opinion that the government should look for some other strategy instead of relying on the IMF.
Talking to Pakistan Today, Dr Shahid Hassan Siddiqui said that the loans obtained from IMF were non productive as they could not be utilised for growth. IMF, he added, had given Pakistan total loans of $ 5 billion in 61 years from 1948 to October 2008 but it approved a record loan of $ 7.6 billion in November 2008 that was later on enhanced to $ 11.3 billion.
The loan was used for balance of payment support at a time when we needed impetus for growth; he said, adding that the decline in growth was now forcing to seek another loan for the repayment of the loan. He said the government should focus on the exit strategy as currently it was paying Rs 900 billion on debt servicing and defence sector was allocated Rs 700 billion while the Federal Board of Revenue was facing difficulties in collecting Rs 1600 billion.
The solution lies in taxing all and promoting growth as otherwise Pakistan will not get out of debt trap. Former Finance Affairs minister Dr Salman Shah said that as the old IMF programme was not likely to be completed and repayments had to be made so there was possibility for a new programme.
He said that the government should focus on a long term growth oriented programme, like Poverty Reduction Growth Facility, which should not slow down the economy like the current one. He stressed that the interest rates should be lowered to promote growth.
