(July 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 Friday said despite the lack of trust between Pakistan and the IMF, a staff-level agreement has been finalised with the lender which is a welcome development.
After the approval of the IMF board, a formal agreement is expected in August, after which Pakistan will be able to obtain loans from other international institutions and friendly countries, he said.
Mian Zahid Hussain said that Pakistan needs $41 billion this year to repay its old debts and finance trade deficit therefore the deal with the IMF was very important for which Prime Minister Mian Shahbaz Sharif and Finance Minister Miftah Ismail deserve praise.
Talking to the business community, the veteran business leader said that the agreement would bring relief to Pakistan and open the way for borrowing from other sources such as the World Bank, Asian Development Bank, Saudi Arabia, UAE, Qatar and the international market.
But because of the current global crisis, the country’s weak financial position and the habit of violating agreements, loans can be more expensive than usual, he warned.
He said that the removal of the hurdle in obtaining new loans will stop the rupee from depreciating, but it is difficult to expect a significant decline in the dollar’s value.
After a sharp rise in fuel prices and taxes, hopes for an agreement with the IMF were raised and now IMF’s loans could start from August, he observed.
Mian Zahid Hussain said that the IMF wants inflation to remain at 7 percent, while reducing government spending, decreasing demand and cutting poverty.
Increasing tax revenues, improving social safety, implementing development programs, improving governance, reducing deficits, and reforms in the anti-corruption, NAB and the power sector are also on the wish list of the lender.
It also includes targets that need to be met in order for the program to continue, however, the economic history of the country has witnessed that no government except a few have tried to put the country on track, and no attention has been paid to reforms, instead of reducing the gap between rich and poor it was widened, and borrowing has been increased.
He said that huge benefits are being given to the elite, which has made the country dependent on borrowing.
Mian Zahid Hussain said that the expertise of economic managers in Pakistan depends on who can borrow and getting a loan is the only merit of an economic manager in Pakistan.