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Pakistan evaded IMF-mandated structural economic reforms compounding its financial crisis, says report

  • Sun Online Desk
  • 22nd December, 2021 06:55:13 PM
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Pakistan’s evasion of structural reforms as mandated by donors such as the International Monetary Fund has compounded its financial problems.

Successive Pakistani governments have not acknowledged their inability to implement the identified and agreed (with donors) necessary structural reforms specifically in the prevailing tax structure (which remains inequitable, unfair and anomalous to this day) and energy sector (with the circular debt rising to as high as 2.4 trillion rupees), according to Dawn.

Further, the donors such as IMF have argued in favour of full cost recovery to raise utility charges.

On the other hand, IMF as well as other multilateral agencies have been criticized in Pakistan with respect to their harsh upfront monetary and fiscal policy conditions that have eroded its growth rate.

However, two observations are critical. First, Pakistan is currently on its 23rd IMF programme, with each programme typically of three-year duration, which implies the country has been on a Fund programme for around 69 years out of its 74-year history. True, many of the programmes were abandoned midway into the programme as and when the balance of payments issue was resolved, according to Dawn.

Meanwhile, the Pakistan government is raising base tariffs over and above the fuel adjustment charges and the Quarterly Adjustment Tariffs – major contributors to the inflationary spiral much against the advice of the IMF directed structural economic reforms.

Further, to blame the donors for being a perennial borrower of the IMF on the economy’s reliance on imported machinery and semi-finished products reflects rather poorly on Pakistan’s long-term planning capacity to import substitution policies which were implemented by India soon after independence, according to a report. (ANI)