A country on the brink shouldn’t violate an agreement with the IMF. Budget ambiguities and contradictions should be rectified. Delay in budget adjustments dangerous.

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(June 15, 2022)

Chairman of National Business Group Pakistan, President Pakistan Businessmen and Intellectuals Forum, and All Karachi Industrial Alliance, and former provincial minister Mian Zahid Hussain on Wednesday said it does not benefit the country with a sinking economy to violate the agreement with IMF in the budget.

Continued violation of the agreement with the lender is irresponsibility which should be ended as soon as possible, he said.

Mian Zahid Hussain said that the ambiguities and contradictions in the budget should be removed immediately so that it can become a workable document.

Talking to the business community, the veteran business leader said that the country was on the brink of disaster but important economic decisions were still being taken on political grounds which was astonishing.

Many issues, including revenues and expenditures, are unclear in the budget, while the IMF has reservations about oil subsidies, current account deficits and direct taxes. He added.

It is impossible to get a loan from the IMF unless our government responds to the reservations of the lender.

Mian Zahid Hussain said that Finance Minister Miftah Ismail has admitted that IMF is not happy with some budget proposals but still no adjustment is being made which is worrisome as it is affecting the economy and the value of rupee.

Delays in important decisions are fuelling inflation which could rise from the current 13 percent to 23 percent, he warned.

Mian Zahid Hussain further said that Pakistan needs 41 billion dollars in the current financial year while presently foreign exchange reserves are barely enough for 45 days of imports and it is impossible to stabilize them in the presence of existing policies.

So far the government has failed to convince IMG to provide 900 million dollars and the friendly countries are in no mood to finance our deficits.

Regarding the budget conflicts, he said that the government has claimed to keep inflation at 11 percent but at the same time it will be raising the price of oil and gas. It has also hinted at imposing heavy taxes on oil, gas and other commodities which will increase inflation.

It has been claimed that the growth rate will be kept at 5% but at the same time reduction of imports has also been announced. If imports are low, the growth rate will also be affected as most of the revenue comes from imports.

An increase in tax revenue has also been claimed but if imports are less then tax collection will also be reduced.

The government has allocated Rs800 billion for PSDP in which a lot of deductions will have to be made to balance the budget.

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