Since the new government came into power, its core focus remained on restarting the International Monetary Fund (IMF) programme to help Pakistan’s economic situation. The government approached the IMF for economic assistance by agreeing with some tough instructions such as increasing petroleum prices, increasing the tax rate on salaried persons, increasing electricity prices and some regressive taxation rules. |
These instructions caused severe loss to poor and lower-middle-class families. Some financial and economic analysts predict that Pakistan can face an economic emergency and bankruptcy as Sri Lanka did. Pakistan banned luxurious items along with normal goods just to control the exchange rate and decrease dependency on imports but Pakistan does not provide an alternative for the replacement of these luxurious products that people are demanding. In just three weeks the dollar crossed 200 rupees increasing the country’s debt and chances of losing sovereignty.
Sri Lanka faced a food shortage, defaulted on debt, and was mostly dependent on imports, as Pakistan is facing currently. The petroleum, electricity, and food prices are increased by huge margins that are solely affecting the poor ones.
The experts predict that these uncertainties and economic emergencies will not only affect Pakistan but its neighbours too, more specifically China, Russia, and European countries. Pakistan provides the main route to China and connects it with Russia, and European countries through CPEC. As there is an economic war between US and China, and if Pakistan faces uncertainties and becomes bankrupt, the huge loss will be to China in form of losing sovereignty and right to CPEC. The connectivity of Russia, China, Pakistan, and European countries will be badly affected. IMF imposed some tough restrictions on Pakistan and provided instructions that only affect the poor and working class rather than the elite. If this keeps going, bankruptcy and economic emergency are certain.
To control this situation, Pakistan should focus on progressive tax rather than imposing a tax on poor ones. Second, it should impose more tax on real estate businesses that only benefit the sole investor. Third, to motivate investors to start industries by providing them low-interest rate loans. Additionally, Pakistan should proceed to China, Russia and Saudi Arabia for financial assistance and ask them to start their businesses in Pakistan. Lastly, the government needs to agree only those instructions which are economic growth-friendly and least affect the working class in a negative way. It should impose progressive taxes and minimize regressive taxes on the poor.
SANAULLAH MIRANI,
Sukkur.