New IMF Agreement, Adverse Effects and Remedies

        Finally, after the budget, Pakistan and the International Monetary Fund (IMF) have agreed on a new package at the staff level, under which USD 7 billion will be provided over a period of 37 months. Final approval will be given by the Executive Board of the institution. The objectives of the new program include macroeconomic stability, monetary policy, sustainable growth and broadening the tax base. The expansion fund facility is available on the basis of economic stability achieved under the 2023 Standby Arrangement. The IMF mission visited Pakistan from May 13 to May 23, after which virtual talks were held. For the first time in the country's 77-year history, the federal government and the provinces approved taxing agricultural income on the demand of Domor.

        The IMF has also issued a statement stating that the share of taxes in GDP will be increased by 3 percent during the loan program. There will be a fair increase in direct and indirect taxes. Tax net collections in the export sector will be improved. The tax net in the retail sector will be increased and the agricultural sector will be brought into the tax net. Administrative affairs in state-owned enterprises have to be improved.

      In the current economic situation of the country, the agreement with the IMF had become inevitable, for which the bitter pill of strict conditions had to be swallowed. The national budget had to be made in consultation with the international organization. It is expected that the new loan program will improve the economy, but it is not a permanent solution to the problem. We are not moving towards self-reliance due to strict conditions. Trapped in the vortex of debt, the debt that is received goes into interest payments. Investment is the best tool for economic stability and with its help all strong economies have achieved stability. Now, however, the economy has to be renewed. Matters have been settled with the IMF, it should also be a foreclosure before the coming inflationary storm. Pakistan needs to improve its infrastructure. 

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