Prime Minister Shehbaz Sharif has stated that Pakistan is in the process of striking a deal with the International Monetary Fund (IMF) to revive the stalled $1.1 billion loan tranche. The loan tranche is crucial for Pakistan to avoid a possible default, as the nation battles an economic crisis. The prime minister made the announcement during his address to the federal cabinet in Islamabad, stating that the IMF program would soon be revived, with one or two items left to be implemented.
Pakistan is struggling to meet the tough conditions set by the IMF, which includes boosting the country’s tax base, ending exemptions for the export sector, and raising artificially low energy prices that are meant to help poor families. The nation is in dire need of funds, as the State Bank of Pakistan (SBP)-held foreign exchange reserves barely cover one month of imports.
To address the economic crisis, parliamentarians approved a supplementary finance bill on Monday that increases sales tax from 17% to 25% on imports ranging from cars and household appliances to chocolates and cosmetics. People will also have to pay more for business-class air travel, wedding halls, mobile phones, and sunglasses. The burden on the already inflation-stricken people has increased with the general sales tax being raised from 17% to 18%.
The prime minister emphasized that austerity measures were a priority for the coalition government, and the ongoing situation also demands the nation as a whole to cut down their expenses and move towards a simple lifestyle. The nation is going through a tough time, and we will have to learn from our past mistakes and move forward, he added.
Pakistan has a long history of seeking loans from international financial institutions to manage its economic situation. The country has already received 10 IMF programs since 1958 and currently owes the IMF around $6.6 billion. The IMF is one of the largest lenders to Pakistan, and the nation is heavily dependent on the IMF to help it tackle its economic challenges.
The IMF has previously expressed concern over Pakistan’s poor economic management and inability to implement reforms. The country’s economy has been plagued by issues such as a low tax-to-GDP ratio, poor energy management, and a high level of debt. These issues have contributed to the nation’s struggle to attract foreign investment and maintain economic stability.
The prime minister’s announcement about the IMF deal has been met with mixed reactions from economists and the public. While some believe that the deal will help the nation avoid default, others argue that the conditions set by the IMF will increase the burden on the already struggling people.
In conclusion, Pakistan is in the process of striking a deal with the IMF to revive the stalled $1.1 billion loan tranche crucial for averting a possible default. The nation is struggling to meet the tough conditions set by the IMF, which includes boosting its tax base, ending exemptions for the export sector, and raising artificially low energy prices. The country is going through a tough time, and austerity measures have been prioritized by the government to address the situation. The announcement about the IMF deal has been met with mixed reactions, with some believing that it will help the nation avoid default, while others argue that the conditions set by the IMF will increase the burden on the people.
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