(February 10-2023)
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 after ten days of difficult negotiations with the IMF, obtaining the Memorandum of Economic and Fiscal Policies (MEFP) is an important development.
After the return of the IMF delegation, further negotiations will continue online while Pakistan will have to impose new taxes worth Rs170 billion, introduce reforms in the electricity and gas sectors and come up with a plan to eliminate circular debt, after which a staff-level agreement would be possible.
Mian Zahid Hussain said that the staff-level agreement will be subject to the approval of the IMF board after which Pakistan will qualify for the loan installment of 1.2 billion dollars paving way for loans from other sources.
Talking to the business community, the veteran business leader said that progress has been seen in the negotiations between Pakistan and the IMF but the international organization has described the government’s steps so far as insufficient for the staff-level agreement.
The assurances of subsequent steps have not been accepted but the institution has appreciated Prime Minister Shehbaz Sharif’s determination to take tough decisions to improve the economy.
Mian Zahid Hussain said that the IMF asked Pakistan to increase its revenue, strengthen its financial position, increase electricity and gas prices, hike interest rates, reduce untargeted subsidies, and help vulnerable and flood-affected people.
IMF has also demanded an increase in social security, phasing out the shortage of foreign exchange reserves and allowing the exchange rate to be determined by the market, and lifting the ban on imports.
The organization also wants to stop the increase in the circular debt and eliminate it, achieve 100 percent recovery of dues in the energy sector, and to increase the energy supply.
Mian Zahid Hussain said that timely and decisive implementation of these reforms are necessary to ensure sustainable development.
IMF’s demands are tough but the need of the hour and delay in their implementation is not in Pakistan’s interest. Pakistan’s real interest is not only in obtaining credit but in moving the economy in the right direction. The implementation of these reforms will lead to a sharp rise in inflation, which will allow targeted subsidies for low-income groups.
As a result of the proposed economic and financial reforms, Pakistan will be able to get rid of poverty and stand on its own feet.
