IMF Pakistan Review: IMF And PTI Government 2023

The resumption of the $ 6bn IMF funding program, which will pave the way for another $ 1bn disbursements, will help resolve financial uncertainties and reduce exchange rate pressure. However, the suffering of the people is not over. If the press release issued by the multinational lender from Washington stops the request to revive the program after Pakistan's approval.

Contrary to what the Finance Minister said, we need to be prepared to raise domestic electricity prices as soon as possible and to raise personal income tax rates by the next budget, as anything is supposed to happen in April last year. Over the past few months, they have said they do not agree with the IMF's demand for an increase in taxes on wage classes, which have been soaring due to inflation, which hit a two-year high of 13 percent in January.

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The IMF has made it clear to Islamabad that personal income tax measures are needed. There is also the setting of electricity tariffs for full cost recovery to prevent a negative spill-over on the budget. This is despite the fact that the minister has repeatedly stated that he refuses to impose an additional tax of Rs 700 billion on the condition of restarting IMF funds and in the mini-budget passed by Parliament last month. 

He promised to reduce the demand to Rs 343 billion. While the IMF has agreed to delay only a few tax measures until next year’s budget, the IMF review on the country’s economy is optimistic for 4 percent GDP growth for the current fiscal year.

However, the government wants Pakistan to endanger the spread of the epidemic, worsening international economic conditions, geopolitical tensions, and delays in the implementation of structural reforms and therefore strengthen productivity. Focus on the actions, investments, and development of the private sector, reforms in public-owned enterprises, and addressing the challenges posed by climate change.

Can the PTI-led government, which is desperate to bring some relief to voters who are reeling from inflation, continue on the IMF course with the 2023 elections? It will not be easy for the government to pursue the tough reforms prescribed by the IMF. Islamabad is likely to see a rapid influx of multilateral dollars from other global lenders, such as the World Bank, after re-entering the IMF program, and the possibility of the government withdrawing from the course later this year cannot be ruled out.