IMF's Dissatisfaction with Budget

 IMF's Dissatisfaction with Budget

Due to cold diplomatic relations with America and Europe and the possible involvement and support of China, Saudi Arabia, Iran, and Russia in the new bloc of the region, the IMF under the influence of America and Europe has given Pakistan no concessions to restore its program. Not ready to give a discount. Pakistan had to face such a situation in 1998 when Pakistan had to go to the IMF for a loan after the nuclear explosions, but due to the anger of the United States, the IMF did not give any relaxation in its conditions and Pakistan went to the IMF to get a loan. All strict conditions had to be fulfilled. Even today Pakistan is facing the same situation. The IMF has been offering Pakistan a series of additional conditions from November 2022, which the PDM government has met despite tough economic challenges and strong public backlash, including raising the State Bank Discount Rate to a record high of 21 percent, Rs 50 per liter on petrol and diesel. Levy of Petroleum Development Levy (PDL), Electricity and Gas 5% increase, while the minimum wages in the private sector had to be increased from 32000 to 33000 rupees per month, despite the lack of resources, 950 billion rupees were allocated to government development projects to reduce public anger over the increase in inflation, unemployment, and poverty, but the IMF did not approve the budget. Expressing satisfaction, the transfer of $100,000 without question has been described as contrary to IMF conditions and said that the government has missed an opportunity to widen the tax base and reduce expenditure. The IMF also demands that the mini-budget of 177 billion rupees presented by the government in the form of a petroleum development levy, sales tax, and other taxes should be integrated into the national budget and approved by the parliament in the form of a finance bill so that these taxes will be passed in the future. Remain in effect for the fiscal year. He has also demanded an additional Rs 10 per liter Petroleum Development Levy (PDL) on petrol and diesel in consideration of the increase in salaries and pensions, which is expected to generate Rs 800 billion in revenue. Finance Minister Ishaq Dar says that $2 billion in safe deposits from Saudi Arabia and $1 billion from the UAE are expected by June 30 on the request of the IMF, while China returned a $1 billion commercial loan yesterday. If the IMF program is not reinstated, it will expire on June 30, 2023. To keep foreign exchange reserves stable, Pakistan requested China to reschedule commercial loans of $1.3 billion this month as a multilateral loan of $900 million is due at the end of June 2023, after which foreign exchange reserves will fall to $3 billion. will come to a lower level. In the Roshan Digital Account (RDA), an amount of 6 billion dollars was sent from abroad, but due to political and economic instability, the withdrawal of investment from RDA continues. A request was made to reschedule commercial loans of $3 billion as a multilateral loan of $900 million is due at the end of June 2023, after which foreign exchange reserves will fall below $3 billion. In the Roshan Digital Account (RDA), an amount of 6 billion dollars was sent from abroad, but due to political and economic instability, the withdrawal of investment from RDA continues.

The country is facing the worst economic crisis at the moment. Aptma has given an ultimatum to the government to restore subsidies on electricity and gas by July 1, otherwise, textile industries will be closed, while the IMF is not in favor of any subsidy considering the budget deficit. At present, the mutual loans of our various countries are 37 billion dollars, of which China's loans are 24 billion dollars, of which 10 billion dollars are mutual loans, 4 billion dollars are safe deposits, 4 billion dollars are currency swaps and 6 billion dollars are loans from commercial banks whose restructuring government But Finance Minister Ishaq Dar has made it clear that the government will not restructure loans from Paris Club, Eurobonds and multilateral donors including IMF, World Bank, and Asian Development Bank so as not to create a negative impression. Govt to increase foreign exchange reserves 1. It plans to issue 5 to 2 billion dollars worth of Eurobonds at high-interest rates, but this is not possible without the restoration of the IMF program. My government suggests that even after 8 to 9 months of tough decisions if the IMF program is not restored, it will be harmful to the country's economy. The government should have kept the IMF on board with budget recommendations and concessions as the IMF's response after the budget is not unexpected. We should resolve the IMF's concerns through negotiations as soon as possible to end the current uncertainty.