An agreement was reached between Pakistan and the IMF in July 2019, under which Pakistan was to receive $6 billion in instalments over a period of three years. However, due to the Covid-19 pandemic and incomplete implementation of the IMF’s condition, the funding was halted. Now, finally, a staff-level agreement has been reached for the release of the next $1 billion.
This agreement will increase inflation and financial difficulties. The adviser on finance said that the petroleum development levy (PDL) on petrol will have to be increased by Rs4.95 per month. GST tax exemptions of around Rs350 billion will also be abolished. In addition, Rs200 billion is being reduced from the federal development budget. One feels that the IMF agreement is like a green chit to other financial institutions like the World Bank, Asian Development Bank and the IFC to demand to monitor Pakistan’s economic policies. The government should take steps to curb the inflation which is a result of the implementation of the IMF program. It should provide direct subsidies to the poor so that they can cope with the rising inflation.
Saddam and Babar Solangi
Islamabad
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