THE resumption of the $6bn IMF funding programme, which paves the way for the disbursement of another tranche of about $1bn, must help clear economic uncertainties and ease pressure on the exchange rate. Yet it does not end the travails of the people. If the press release issued by the Washington-based multilateral lender after the approval of Pakistan’s request to revive the programme paused since April last year is anything to go by, we should brace ourselves for another increase in the domestic electricity prices sooner than later and the enhancement of personal income tax rates latest by the next budget. That is contrary to what the finance minister has been telling us for the last few months — that he had not accepted the IMF demand to raise taxes on the salaried classes groaning under soaring price inflation, which shot up to its two-year high of 13pc in January. The IMF has unambiguously told Islamabad that personal income tax measures are ‘essential’. So is the alignment of the power tariffs for a fuller cost recovery to avoid its adverse spill-over on the budget. This is in spite of the repeated claims made by the minister that he had declined the IMF condition to impose additional taxes of Rs700bn for resumption of its funding, and convinced it to slash its demand to Rs343bn in the mini-budget approved by parliament last month. Apparently, the IMF has agreed to only delay certain tax measures till the budget for the next year.

That said, the IMF review of the country’s economy remains optimistic for a GDP growth of 4pc for the present fiscal. Nonetheless, it warns that Pakistan remains vulnerable to possible flare-ups of the pandemic, tighter international financial conditions, rise in geopolitical tensions and delayed implementation of structural reforms. Therefore, it wants the government to increase its focus on measures to strengthen productivity, investment and private sector development, reform state-owned enterprises, and address the challenges posed by climate change. Can the PTI-led government, desperate to provide inflation-stricken voters some respite, be able to stay the IMF course with the 2023 elections approaching fast? It is never easy for a government to carry on with tough IMF-mandated reforms. With Islamabad likely to see faster inflows of multilateral dollars from other global lenders such as the World Bank after its re-entry into the IMF programme, chances of the government digressing from the course later this year cannot be discounted.

Published in Dawn, February 4th, 2022