IMF is a specialised agency made to reduce the global poverty, encouraging internal trade and promoting financial stability and economic growth. Intergovernmental organizations (IGOs) have always played a very important role in the global economy. These groups are generally created through the enactment of a treaty and are composed of a group of member states. The goals of these organizations depend on their function and membership. Some of the most common and widely known IGOs include the United Nations, the World Bank, and the (IMF) International Monetary Fund. The IMF has three main functions: overseeing economic development, lending, and capacity development. Through economic surveillance, the IMF monitors developments that affect member economies as well as the global economy as a whole. The IMF lends to its member nations with balance of payment problems so they can strengthen their economies. Also, the group provides assistance, policy advice, and training through its various technical assistance programs.
The primary functions of the IMF are to promote stability in the global monetary system. So, its first function is to monitor the economies of its 190 member countries. This activity, known as economic surveillance, happens at both the national and global levels. Through economic surveillance, the IMF monitors developments that affect member economies as well as the global economy as a whole. Member nations must agree to pursue economic policies that coincide with the IMF’s objectives. By monitoring the macroeconomic and financial policies of its member countries, the IMF sees stability risks and advises on possible adjustments. The member countries include Island, Pakistan India, Iraq, Norway, United States, Germany, and many more.
Formed to reduce or lessen the global poverty, the IMF has given loans in trillions of $ till now. Pakistan is in the list of top ten countries which have taken the most debt from this agency. It has been more than 5 decades that the country is still struggling to make its economic situation better. Every year, Pakistan takes the loan due to its overspendings and with each passing day, the country is getting submerged into more loans. The organization which agrees on giving loan to Pakistan each year should ask the leaders that why they are not able to return the amount or why do they need funds every year. In the history of this state, it has been ruled by the politicians or the democratic governments for more than 42 years. If we analyze each of these tenures, we can simply and honestly say that all of the major developments in the country are made in the dictator eras and major corruption scandals are out in the democratic ages. All the misters of democratic governments and members of the ruling party divided major parts of the funds and the loans to fulfill their pockets. Moreover, they gave special positions and statuses to their undeserved relatives, children, and special ones.
In this whole scenario, there should be an action taken against such politicians and leaders by IMF. Still, politicians are looting this country and getting loans easily by agreeing on all of conditions given by IMF. As a result, the inflation is at its highest peak in the history of Pakistan which is generating horrible crippling economic momentum which can be the shape of civil war. In the existing weekly scenario, one day, the government announces that the fuel prices will be reduced from 146 to 140, and after 10 days, there is an increase of 5 rupees again. IMF should take a notice and strict action against all such policies and ask the previous governments about the funds and the loans. Pakistan is going through hard times due to the passive policies of democratic governments and now it’s time for the whole nation to get united for the recovery process. Pakistan has been grappling with historical currency devaluation, high inflation, and a current account deficit and dwindling foreign reserves.
Currently IMF is demanding a 1% tax increase, to make up for decreases in taxes from this government in 2018. According to my analysis, Pakistan’s reliance on the bailout package will put the economic policy in the hands of the IMF. The agency is going to put the country under aggressive taxation governments to enhance Pakistan’s debt repayment capacity. Recently, the government announced an increase in tax. Cell phones, gold, and silver will bear 17% of tax, tax on oil import has been increased from 5 to 17 percent, a new tax of 17% will be levied on imported machinery for mining, retailer tax increased from 10% to 17%, tax on goods sold in sashay increased from 8% to 17% and on foreign government gifts and donations. 17% sales tax is levied on sending packets by post as well as on imported animals and poultry. On agricultural seeds, plants, equipment and chemicals it has also been increased from 5% to 17%. On poultry machinery, it is increased from 7 to 17 percent. Multimedia tax has also been increased from 10 to 17%, and on battery it is increased from 12% to 17%.
This increase in taxation when there is already a downfall in business is not a bold step taken by the government. Moreover, the departments have failed to make a good tax return policy. The set percentage is always changing and people including small to medium industrialists and businessmen are worried. Neither the government nor the departments are taking citizens seriously and with every passing minute, Pakistan is going back rather than developing and competing with other developed countries. There should be some standards for every activity and inflation should be controlled. If not, the suggested salaries should be enough that a common salaried person can earn enough to feed his family like Japan where the inflation is high but at the same time, there salaries are decent. We hope that one day; Pakistan will return all of its loans and its people can proudly say that we live in a developed country.
MUHAMMAD NADEEM BHATTI
— The writer is a senior economic analyst and chairman of Pakistan Columnist Council and can be reached at figure email@example.com.