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New tranche of IMF loan programme

New tranche of IMF loan programme

The International Monetary Fund (IMF) has approved tenth loan tranche of the $6.2 billion loan programme apparently after the government bowed to its dictation and slapped Rs 40 billion additional taxes on the people to meet the shortfall in tax revenues. The history of loans, which started in 1951, reveals a compelling fact that the governments after governments in Pakistan had failed to improve financial discipline at home and found it an easy way to get loans from world lending agencies to meet the state expenditures. After the approval of the current tranche from the IMF board of directors, at least $4.98 billion would have been disbursed to Pakistan under the programme which the donor agency had approved in September 2013. As a matter of fact, the current government could not meet the conditionalities of the donor agency to restrict the budget deficit and reduce net domestic assets within a limit prescribed by the agency for the first quarter of the current fiscal year.

When the government finds it easy to impose indirect taxes, it actually forces the economic development to take two steps back. Instead of taking hard decisions, the economy of loan is approaching toward a saturation point as the nation has been burdened with $90 billion loans so far. The government had been given a target to collect Rs 640 billion taxes, but it could collect Rs 600 billion, leaving with no option but to burdened the economy with another Rs 40 billion tax to pave the war for the tenth tranche of the loan. The new financial colonialists always attach strings with extension of loans and the amount of money the government spends on the arrangements of meetings in Dubai can be anybody’s guess. According to news reports, the government has so far enjoyed 14 waivers in nine reviews of the national economy, highlighting a fact that the government is still not in a hurry to introduce structural reforms in the tax collection system.

The point is when the government knows it cannot meet the tough conditions of the donor agencies, why it is insanely runs after loans. The World Bank, IMF, Asian Development Bank or any donor agency, all push the government to increase taxes to generate additional revenue. And new taxes put more harm to the economy than any good to it. People want democratic set up to show good performance, good governance, perfect regulatory regime, ensure security and curb corruption. But every government in this country completes its tenure without any remarkable achievement and life goes on.