29 September, 2020

Brink Of Disaster

IMF's shelving of its loan spells bad news for Pakistan's economy

Brink Of Disaster
outlookindia.com
-0001-11-30T00:00:00+05:53

Now that the Kargil crisis is over, is it finally time to ask: Was Kargil a terrible misadventure for South Asia's not-so-friendly neighbours? Especially for Pakistan, since the IMF finally took the dreaded decision of postponing a $280 million loan.

International experts insist the Fund shelved its loan tranche more due to Islamabad's laxity in tax collections (18 per cent behind target), less because of US pressure. Still, the decision sent shivers up the spine of the Pakistani government and caused finance minister Ishaq Dar to rush to Washington to talk to IMF on July 21. The fourth tranche of the esaf/eff funding programme of $1.6 billion was expected early in August but Pakistan's failure to meet many conditionalities-reportedly, some 22 objections-has now pushed it to October, subject to another IMF review in mid-August.

Understandably, policy responses have tumbled out-the State Bank of Pakistan has been empowered to transact dollars directly, in a bid to shore up the rupee. A steep general sales tax on all fuels and power, an income tax crackdown on the feudal...

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