“If we go to the IMF, we would have to implement their recommendations, which means our cost of doing business would escalate further and we would be more uncompetitive in international market,” said Ghazanfar Bilour, President of the Federation of Pakistan Chambers of Commerce.
Business community fears that if Pakistan seeks bailout package from the IMF, it would ask to implement more taxes, to increase prices of electricity, gas and other industry inputs, which would adversely affect country’s dying industry.
Also Read: Tax amnesty and economy of Pakistan
Previous government admitted numerous times that cost of doing business in Pakistan, including high electricity and gas prices, is higher than any other country in the region that makes Pakistan uncompetitive in international market.
Pakistan has gone to the IMF repeatedly during the last thirty years. In 2013, it got a $6.6 billion loan to tackle a similar crisis but now it needs at least $12 billion to avoid an economic meltdown.
ease of funds for textile export package announced the by previous government otherwise our textiles exports would further decline to irreparable state,” Bilour said.
The traders’ representative said China has announced a $2 billion loan for Pakistan, the Islamic Development Bank has activated $4.5 billion facility for oil imports and a global bank has decided to give $200 million to help finance LNG imports but these are short-term solutions.
The growing budget deficit is pushing country on the verge of a balance-of-payments, the value rupee, ability to repay debts or pay for imports, is something which bother business community.
But Pakistan has far greater challenges. US Secretary of State Mike Pompeo, in a recent statement, warned that any potential International Monetary Fund bailout for Pakistan’s new government should not provide funds to pay off Chinese lenders.
“Make no mistake. We will be watching what the IMF does,” Pompeo said. “There’s no rationale for IMF tax dollars, and associated with that American dollars that are part of the IMF funding, for those to go to bail out Chinese bondholders or China itself,” Pompeo told CNBC television.
Pompeo’s statement has come at a time when the new government of Imran Khan is in-waiting and it seems very hard for the cricketer-turned-politician to come up with a strategy to pull out the country from grave economic crisis.
(This news/article originally appeared in The Nation on August 6th, 2018)