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Perils of another loan plan

Official circles indicate that Pakistan is unlikely to enter into another assistance program of the International Monetary Fund once the current extended facility plan ends. However, the country is still looking toward a new loan from the World Bank. According to newspaper reports, the bank is considering offering $500 million in the name of budgetary support as it wants to extend its engagements to a number of reform areas. The bank’s ‘Pakistan Equitable Growth Development Policy Credit’ will support the government to improve business environment in the country and enhance competitiveness of the private sector as well as improve the fiscal discipline to maintain macroeconomic stability and create important fiscal space. Earlier, the bank had launched Fiscally Sustainable and Inclusive Growth series to complete unfinished reform efforts as well as introduce new reforms crucial for the economic growth. The bumpy road of loans has made the economy of the country hostage to the foreign donor agencies and the World Bank is not an exception which is partner in economic gains but master of the country in economic losses.

The single-tranche stand-alone loan is likely to be approved in June with an objective to create conducive environment for private sector investment. The reforms are actually a dictation to enhance tax base and tax rates. No doubt the country needs to enhance tax base which is very small keeping in view the volume of economy in the country. However, instead of improving the system, enhancing the tax base will create more troubles for the economy than any good. The policymakers, under the pressure from foreign donors, are left with only one option, to extract more and more from the business class. A vicious circle starts and businessmen find it easy to shift with all their paraphernalia to investment-friendly countries. Businesses only flourish when there is tax relief but undue pressures lead to capital flight which is currently going on in this country.

If there is a need to introduce reforms, it is the sole responsibility of the government and not of any foreign agency. No one should be allowed to tell what the right is and what the wrong for the country is. But the government finds it an easy way to get loans and run the country and then leave the burden of debts for the next government. There is no dearth of money in the country, but trust deficit between the government and the investors is a big hurdle to stimulate the business activities. The nation does not need loans, but wants fair and transparent administration to run the country’s affairs.

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