To avoid bankruptcy, Pakistan was finally forced to bow down to the International Monetary Fund (IMF). Today the National Assembly of Pakistan unanimously passed a money bill to meet the demands set by the IMF. Explain that if Pakistan fulfills the conditions of the IMF, then it will get a loan facility of about Rs 8800 crore. According to the report, the Finance Bill 2023, which is being called the mini-budget of Pakistan, was approved in the lower house of the parliament. The Government of Pakistan had to take this step to restructure the debt.
Let us tell you that the government introduced this bill last week to pass it by the weekend, but it could not do so after facing criticism from its allies. In his speech, Finance Minister Dar blamed mismanagement in the power sector and poor economic policies of the previous Pakistan Tehreek-e-Insaf (PTI) government for the current financial crisis.
The bill will help collect 170 billion rupees earmarked by the IMF for the end of the current fiscal year by the end of June. The new taxes along with other measures by the government will further burden the public with inflation which is already high. However, it brings Pakistan closer to receiving a USD 1.1 billion tranche from the IMF to support its dwindling foreign exchange reserves which are critically short of just USD 3 billion.
Pakistan took this step after the advice of the IMF chief
The IMF chief said Pakistan was devastated by flash floods last year that affected a third of its population. I want to emphasize that we are emphasizing two things. Number one tax revenue. Those who are making good money in the public or private sector need to contribute to the economy.
Secondly, fair distribution of pressures by making the subsidy reach only those who need it. It should not happen that subsidies benefit the rich. The IMF chief's statement came days after both sides completed the ninth review of the $6.5 billion bailout package without a staff-level agreement after 10 days of talks. However, both sides agreed on a set of measures that could still help in achieving the deal.
Pakistan facing a severe economic crisis
Pakistan, which is facing a severe economic crisis, is in dire need of money. It has received financial assistance from the IMF in the past and is currently in discussions with the organization to restart its loan program. An agreement on the ninth review of the program will release over Rs 8,000 crore. The restoration of the IMF program will also open up other funding avenues for Pakistan.
Foreign exchange reserves of the State Bank of Pakistan fell
Meanwhile, foreign exchange reserves with the State Bank of Pakistan have dropped to around US$3 billion, barely enough to cover three weeks of controlled imports. Earlier, the IMF said in a statement that the two sides have agreed to remain engaged and the virtual discussions will continue in the coming days to finalize the implementation details of policies, including tax measures, discussed in Islamabad.
Also Read: Pakistan: IMF advice to Pakistan facing a cash crunch, take these steps to work as a country
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