digital desk, Islamabad. In a major decision taken by the Imran Khan-led government in Pakistan, which could further exacerbate the suffering of the poor, Islamabad has taken a $6 billion bailout package from the International Monetary Fund (IMF) to ensure its revival. have agreed to take a significant step with PKR 800 billion by cutting and implementing more taxes.
The Government of Pakistan has also revealed that steps will have to be taken within two months in view of a big jump in inflation in the country in the coming days.
Shaukat Tarin, Adviser to the Prime Minister on Finance, spoke about the tough negotiations that come with very challenging circumstances, which he said will not only consume significant political capital, but will also lead to another wave of inflation.
The tax collection target of the Federal Board of Revenue (FBR) has been raised to Rs 6.1 trillion – about Rs 300 billion extra – and the government will also have to approve the State Bank of Pakistan (SBP) amendment bill in Parliament, Tarin said.
Tarin said electricity rates will increase in the next few months, which is currently estimated at around 50 paise per unit. However, Tarin also clarified that this would be determined at the level of the circular loan.
Pakistan’s agreement to the IMF’s stricter conditions is being taken as another bitter pill that will have to be swallowed by the locals, who are already suffering due to the hike of Rs 3.63 per unit. Additionally, fuel prices have also been increased by about Rs 20 within a period of 90 days.
The revelation follows Pakistan’s agreement with the IMF to take measures to secure the approval of the $1 billion loan tranche.
A statement issued by the IMF said, Pakistani officials and IMF staff have reached a staff level agreement on the policies and reforms required to complete the Sixth Review under the EFF.
Tarin also acknowledged that these steps would bring misery and hardships to the lives of the low-income group, which he said would be facilitated through targeted subsidies.
Pakistan has been directed to ensure a primary budget surplus after paying debt repayment costs against a deficit budget target of Rs 376 billion, which requires strict fiscal discipline which will have a severe impact on the economy.
It seems that the IMF did not budge from its harsh position during the talks and Pakistan is left with no option but to accept its shortcoming and agree to the difficult conditions to revive its financial bailout.