IMF sets very tough conditions for Pak to receive bailout package, shows no flexibility

[maithil]

Import substitution may inflict some damage on Quality of Life. But will surely help in fiscal health of country. Remains to be seen if PTI is ready to alienate support of its most vocal supporters.

 

[Nilgiri]

Before we bash the FM any further, atleast wait for something official or some details from a reliable news agency.
Any way here are unofficial details:
https://dunyanews.tv/en/Business/486720-Bailout-Package-IMF-sets-tough-conditions-for-Pakistan-


@Nilgiri @VCheng @ziaulislam

Apart from the removal of tax break on salaries from rs 1.2mil to rs 400k ... I dont see anything tough or anything bad that shouldnt be done anhway to reform our economy? Maybe the 1% increase in GST?

Here are some main points reported so far (still unofficial)

1) State Bank authority of decisions regarding dollar rate and make National Electric Power Regulatory Authority (NEPRA), Oil and Gas Regulatory Authority (OGRA) independent.

I think on the book this means govt wont be able to control rates directly. Now off the book how “independent” an institution can really get in Pakistan? I still think this is a needed reform in the long run as it will remove poltical interference and help us balance losses. I am interested to kmow how we can make them independent but at least give the govt options to mediate in prices and rates to a certain extent if needed.

2) the target of tax should be fixed at Rs5000 billion.

This wil be tough only if we fail to broaden our tax base. Maybe temporarily until we broaden tax base and add new taxpayers - i mean a population of 200 million with ~2milion taxpayers is just shameful.


3) The Fund further demanded to decrease electricity and gas losses. Government should not interfere in the decisions of National Electric Power Regulatory Authority (NEPRA) and Oil and Gas Regulatory Authority (OGRA). As many as Rs140billion outstanding of the electricity and gas should be recovered from masses.

No $#it - we should all pay our bills and govt should remove losses and collect outstanding bills. This latharginess of not collecting bills and holding offenders responsible has to end some day I guess!!

4) The tax relaxation should be brought down to Rs400,000 from Rs1.2 million.

This I think is a tough condition as it will hit the middle class salaried households.

@BHarwana question specially for you: So i guess we are now going for IMF bailout or you have still have some twist to report?

Hi I didn't get your tag (and only reading the full thread body only now)....so I suspect the others didnt either.

You are right that Pakistan should become less oligarch vested interests....and more functioning on such basic fiscal things. That is the basic issue here really getting in the way of free market information disseminating quickly and rapidly so that Pakistan can stay within its means much better (and grow sustainably, rather than shocks and fits).....rather it (oligarch malaise and special buffers etc) has been accumulating like fatty deposits in clogged arteries etc. It helps the few on rich buttery diet at top, but poor and regular ppl never signed up for it and are forced to share the same body full of this problem.

I will try talk more on this subject later...I have posted some posts earlier too I will reference as before and after now, given some time has progressed.....but maybe I will let the year come to finish first.

 

[blain2]

If you are a politician, the IMF conditions are horrendous. If you are thinking about viability of a free economic system with little interference from government and getting the government out of the business of offering subsidies to all and sundry, then the IMF conditions make sense.

The whole idea of the IMF package is to get the country on stable footing and not having to come back to the same situation where it needs assistance. It is Pakistan's own short sighted policies that we have gone to IMF 10+ times.

The IMF is not setting traps for Pakistan to come back to it. Our pols bring this upon the country because of the inherently unfair system of not taxing effectively and passing out subsidies in an unsustainable manner just to win votes.

I feel sorry for the Pakistani awam in some ways but not for the fact that they do not do their part in paying taxes. No country can run with such a low tax collection rate. It is unfair to myself and others who pay taxes!

Pakistan has some tough times ahead but its better to get through this bitter pill now. Greeks had to go through some serious austerity measures so what Pakistan has to do is not unprecedented. The powers that be will squeeze us from all directions but its the collective fault of the past governments that we are at this point.

 

[VCheng]

Pakistan has some tough times ahead but its better to get through this bitter pill now. Greeks had to go through some serious austerity measures so what Pakistan has to do is not unprecedented. The powers that be will squeeze us from all directions but its the collective fault of the past governments that we are at this point.

Blaming the past can work as an excuse only for so long. It is time in the present for PMIK to deliver on his promises through the rest of his term if there is to be a better future.

 

[Asian.Century]

CPEC has become a pain in the neck of the forces hostile to Pakistan. They know it very well that CPEC is a life-line of Pakistan and after completion this project is going to give Pakistan a new economic boost. This project would certainly liberate Pakistan from the economic exploitation of the institutions like IMF which are simply like tools in the hands of US. Recently it was reported in media that IMF is pressuring Pakistan to either slow down work on the CPEC or come out of it. Coming out of the CPEC or slowing it down means spoiling China’s wonderful contribution to Pakistan’s future. IMF has asked the government to make the revenue target of Rs5400 billion for the next budgetary year. Commenting on IMF’s terms and conditions Dr. Ashfaque Hasan Khan, a renowned economist said that GDP growth numbers worked out by the IFIs such as 3.9 percent by the ADB, 3.4 percent by the World Bank and 2.7 percent by the IMF served nothing but to push Pakistan to the Fund on strict terms. He said by these figures one can easily make it out, on the one side, the Fund is predicting the lowest GDP growth, on the other side it is asking for 40 percent growth in revenue. The contradictions clearly show the world powers are blackmailing Pakistan with IMF bailout package. In short the international hostile forces are pushing Pakistan to an alley of economic exploitation.

Another example of economic exploitation of the counties like Pakistan is the Grey List prepared by FATF. The abbreviation FATF stands for Financial Action Task Force. Since 2000, the FATF is issuing a black list consisting of the names of the countries which it judges to be non-cooperative in the global fight against money laundering and terrorist financing. Such countries are given the name of Non-Cooperative Countries or Territories. In short FATF’s grey list includes countries that are not doing enough to fight money laundering and terrorist financing. This list keeps on changing with the passage of time and the names of those countries are struck off which take serious action in the light of guidelines provided by FATF. Pakistan’s name had been in the grey-list for three years, i.e., from 2012 to 2015. Later on, the Task Force recognized Pakistan’s efforts and removed its name from the grey list in 2015. Unfortunately in spite of Pakistan’s all successful efforts against the money-launderers and terrorist financers, once again Pakistan’s name was included in FATF’s grey-list. Experts say that this inclusion was a result of conspiracy of the forces hostile to Pakistan’s progress, peace and prosperity. On top of the list of such countries were USA and India. These two countries spent a lot of resources on lobbying against Pakistan in shape of a well planned media war. By defaming and blaming the religious parties and their leaders; by fixing and framing sometimes Hafiz Saeed and sometimes Molana Masood Azhar, these countries did all their best to achieve their objective and ultimately succeeded in dragging back Pakistan’s name in FATF’s grey list somewhere in mid of June 2018. But Pakistan did not lose heart and kept on bringing the things back into the order desired by FATF. The Khaleej Times has recently reported that Pakistan is going to be excluded from FATF’s grey list by September 2019.

Now it is in the news that FATF team is satisfied with Pakistan’s overall efforts and action plan to fight the menace of money laundering and terror-financing. Certainly the present government of Pakistan is doing all its best for the financial stability of the country by keeping a strict eye on all those who are providing a chance to the forces hostile to defame Pakistan by getting involved in financial malpractices. The determination of our government in this matter is really admirably commendable. If Pakistan’s name is excluded from the grey-list, it would save Pakistan from an annual loss of approximately $10 billion. To keep the country safe from the ‘grey-list conspiracy’ in future the government of Pakistan has tightened the security along Pak-Afghan and Pak-Iran borders and certainly the Line of Control is also being observed and guarded very strictly as international watch-dogs consider these routs as the ‘ key routes’ for money laundering and terror-financing. It is really a hard luck for Pakistan that its neighbouring countries never miss a chance of joining hands with the forces hostile to Pakistan but in spite of all these facts we the Pakistanis have a lot of courage to face and defeat all such conspiracies.

 

[blain2]

Blaming the past can work as an excuse only for so long. It is time in the present for PMIK to deliver on his promises through the rest of his term if there is to be a better future.

Agreed but he hasn't even finished the first year in office and people are already baying for blood! What has been broken down over the past 10-15 years will need more time to restructure and then to turn the economy around.

 

[VCheng]

Agreed but he hasn't even finished the first year in office and people are already baying for blood! What has been broken down over the past 10-15 years will need more time to restructure and then to turn the economy around.

Agreed. PMIK must be given at least the rest of his appointed term to start delivering results.

 

[nahtanbob]

Pakistanis don't even buy their own soap...how hard is it to make soap? What quality issue is in soap? Pakistan needs to get its hand out of its hairy butt and say we will eat grass but we will build a account surplus.

you can make soap as a science experiment

 

[Śakra]

you can make soap as a science experiment

The thing is YOU can but they CAN'T

 

[CrazyZ]

The thing is YOU can but they CAN'T

Lower class and rural Pakistani's can produce their own soaps at home (actually not that hard). The problem is the urban bourgeois that prefer western name brands.

 

[nahtanbob]

Lower class and rural Pakistani's can produce their own soaps at home (actually not that hard). The problem is the urban bourgeois that prefer western name brands.

i do not know if pakistan produces all the ingredients for making soap

 

[CrazyZ]

lye + water + oil/fat = soap

My Grandmother use to make soap at home. The lye may have been imported.. don't know the specifics....I was just a kid.

My wife loves Dove and Pantene, (she is solidly the new urban bourgeois). I can't get her to stop buying western brands.....What a difference two generations makes.

 

[GriffinsRule]

lye + water + oil/fat = soap

My Grandmother use to make soap at home. The lye may have been imported.. don't know the specifics....I was just a kid.

My wife loves Dove and Pantene, (she is solidly the new urban bourgeois). I can't get her to stop buying western brands.....What a difference two generations makes.

I used to think Lifebouy was a Pakistani brand -_-

 

[ziaulislam]

Pakistanis don't even buy their own soap...how hard is it to make soap? What quality issue is in soap? Pakistan needs to get its hand out of its hairy butt and say we will eat grass but we will build a account surplus.

well problem is elite of pakistan..the elite that doesn't work and is corrupt

90% of rich people are grde 17 officers that if are honest workers will not be able to even afford a bicycle

Lower class and rural Pakistani's can produce their own soaps at home (actually not that hard). The problem is the urban bourgeois that prefer western name brands.

problem is govt failure to levy direct taxes..

remeber how much noise was made on gas tarrif rationalization..what suprised me that it was an issue when 80% of pakistanis dont have gas and use expenisve LNG that is highly taxed to subsideized the urban middle class

 

[swnjo]

lye + water + oil/fat = soap

My Grandmother use to make soap at home. The lye may have been imported.. don't know the specifics....I was just a kid.

My wife loves Dove and Pantene, (she is solidly the new urban bourgeois). I can't get her to stop buying western brands.....What a difference two generations makes.

P&G, unilever usually manufacture product locally. Heck even Nepal has a unilever plant.why Pakistan don’t have local manufacturing plant.