USD 7 billion IMF bailout at risk as Pakistan's economy continues to weaken
Islamabad: The fundamental assumptions used to finalise the USD 7 billion deal with the IMF have gone awry within a month of its approval, leaving the authorities concerned with an option either to renegotiate the package or keep suffocating the economy through more taxes, according to a media report on Thursday. Official statistics show that out of four key underlying assumptions for achieving the nearly Rs 13 trillion tax target — the economic growth rate, inflation, large-scale manufacturing and imports — three assumptions have already been proven wrong by the end of the first quarter of the current fiscal year.
The federal government has also overly committed on behalf of the four provincial governments that, too, are struggling to meet their conditions soon after the deal became effective.
The Express Tribune newspaper reported that the official statistics for the first quarter (July-September) revealed that — from the Federal Board of Revenue's tax collection target to provincial cash surpluses — everything has gone off the mark.
Deputy Prime Minister Ishaq Dar has also publicly spoken against the market-determined exchange rate regime, which is another core objective of the $7 billion Extended Fund Facility.
The IMF is again pressuring Pakistan to let the rupee further devalue; although as per Dar's views the rupee is already undervalued by at least 16%.
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