LAHORE - The business community has asked the government to debate the matter of financial assistance from the International Monetary Fund in the Parliament to evolve a firm policy to ensure judicious use of the amount of the IMF loan.
Reacting sharply to the $6.7 billion International Monetary Fund loan to Pakistan, they said that it would bring fresh wave of price hike.
They said that the people would not be benefited by the IMF loan, as the rulers would continue lavish spending. They also lamented the rulers were not bringing back their money kept in the foreign countries.
They said that the IMF loan would have devastating effects on economy, as with more taxes, increased rates of utilities and cost of production would further increase. This will thus render Pakistani exports non-competitive in the globalised competitive environment, he feared.
All Pakistan Business Forum chairman Nabeel Hashmi, perturbed at the new so-called business friendly government’s deviation from its election manifesto, said that this is not what PML-N promised the people of Pakistan.
The IMF conditions already implemented in the budget, included power tariff hike, raise in petroleum prices, gradual end of subsidies, raise in sales tax, cut in fiscal deficit, improvement in tax-to-GDP ratio, enhancement in tax net and restructuring and privatization of public sector enterprises..
He argued that policies dictated by the IMF were not always suitable for the situation of the country. He argued that there are several examples of how the IMF failed to understand the dynamics of the country that they were dealing with.
All Pakistan Business Forum President Rashid Mehr said that the government had no other option but to approach International Monetary Fund to control its fiscal imbalances, which country has been facing due to dwindling foreign reserves, balance of payment crisis, weakening exchange rate and financial mismanagement during the last five years.
“However, this is short-term solution and borrowing a long-term loan from the IMF is not the most viable and rational option for any country,” he warned.
Rashid Mehr said that with a view to bridge financing gap of $5-6 billion, there are different medium-term solutions to fill this gap as the new government will have to generate non-debt inflows such as foreign investment and remittances or cut down trade deficit by boosting exports and reducing imports.
He said that no IMF bailout package has ever been successful since 1988 due to lack of fiscal management and any solid structure for repayment.