IMF loans can compromise Pakistan's economic sovereignty, says expert

Islamabad [Pakistan], February 10 : The International Monetary Fund (IMF) has agreed to provide a USD 6 billion bailout package for Pakistan, but it can adversely affect common livelihoods and can compromise Pakistan's economic sovereignty.
Valerio Fabbri, writing in Geopolitica.info said that Pakistan's economy is in the doldrums. To make the matter worse, inflation has reached alarming levels- 12.3 per cent in December 2021 - and the country's currency is weakened to Rs 176 to a dollar- a 30 per cent reduction in the past three years.
Amid the economic instability, Imran Khan's decision to pass a mini-budget or supplementary budget to facilitate financial aid from the International Monetary Fund (IMF) is set to increase taxes on a range of imports, exports and services.
This has put immense pressure on the Imran Khan government, as food and fuel price are skyrocketing. Pakistan can easily slip into a debt trap in case of loan defaulting, as it has already received USD 3 billion each from China and Saudi Arabia and USD 2 billion from the United Arab Emirates.
This will not only burden common households and hurt the industry, but it will also compromise the country's economic sovereignty too, said Fabbri.
Pakistan's renowned economist Qaiser Bengali said "All the loans it has been taking now, from whatever sources, are to pay past loans."
The mini-budget was a part of the IMF conditions that compelled the Islamabad government to increase power tariffs, levy higher duty on fuel prices and pull out tax exemptions.
This, however, has angered people in Pakistan as the higher taxes have aggravated their sufferings. The mini-budget has fuelled inflation, irking millions of people who are finding it difficult to fulfil the basic requirements, reported Geopolitica.info.
Moreover, the State Bank of Pakistan (SBP) has forecast high inflation of 9-11 per cent in 2022. Opposition leaders in Pakistan have been criticizing Khan-government for creating survival problems for poor people.
Pakistani legislator Farooq Hamid Naek said, "The revenue of the government is being increased at the cost of oppressing the common man."
Industry and businesses too are feeling the heat. The Vice President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Nasir Khan, said the mini-budget would lead to smuggling of cheaper goods as the cost of domestically- manufactured goods would be higher due to withdrawal of tax exemptions, which will have a negative impact on industrial activities, reported Geopolitica.info.