ISLAMABAD: After witnessing a massive decline in oil prices in the international market that nosedived to $39 per barrel, Pakistan’s economic managers are seriously considering to say ‘goodbye’ to the IMF after the expiry of the existing bailout package by the end of 2016, The News has learnt.
This thought among official circles has come on the surface as the government kick-starts preparation for the next budget 2016-17 whereby focus will be on achieving a higher growth trajectory in order to create more jobs and reducing poverty at the time of nearing its five-year tenure.
“The IMF programme suggests one shoe fit for all as it always asks the recipient countries to reduce the budget deficit even at the cost of growth,” said the sources. After achieving stabilisation on economic front, there is a growing demand and appetite for boosting growth in the range of 6-7 percent, which will not be possible under the Fund programme, added the official.
Some economists said that it could become a viable option for the economic managers who would like to go ahead with an unbridled expenditure during the last one-and-a-half year tenure of the incumbent government after the expiry of the existing IMF programme by the end of 2016. All this will be done in a bid to win the upcoming general elections going to be held in 2018.
This option is under consideration after removing volatility on external front in the wake of a historic low in oil prices in international market as well as the government’s wish to go ahead with spiral spending during the last one and a half years rule in order to push up the GDP growth in the range of 6 to 7 percent in 2016-17 and 2017-18.
“Pakistan may say goodbye to the IMF if it remains able to mobilise the tax revenues and provides incentives to boost exports in the range of $3 to $5 billion,” official sources confirmed while talking to The News here on Thursday.
When contacted, former governor State Bank of Pakistan (SBP) and renowned economist Dr Ishrat Hussain recommended the government to focus on revenue mobilisation and boosting exports in order to come out of the IMF programme after the expiry of existing arrangement by end 2016.
“We need to focus on raising domestic revenues in order to meet the growing development requirements. If the provinces can tap resource mobilisation through property by bringing this sector fully into the tax net, the country can generate billions of rupees in shape of taxes on an annual basis,” he added.
When asked about Islamabad’s ability to tackle the external front (balance of payment) position without having the IMF’s assistance, Dr Hussain said that Pakistan could manage its external account by boosting exports by $3 to $4 billion by providing incentives in the shape of reduced energy prices. There is a need for slashing down electricity prices which can result in boosting exports up to the desired level, he said and added that the exports remained flat and possessed the potential to fetch $3 to $4 billion by removing bottlenecks.
This scribe also contacted former finance minister and reputed economist Dr Hafiz A Pasha who said that he did not believe that the government would opt to go for another IMF programme after the expiry of the existing one mainly because of ‘political reasons’.
Another IMF programme, he said, would curtail expenditure in order to bring the budget deficit in line with the Fund programme but the government heading towards political expediency would not like this move because they had failed to curtail the current expenditure.He said that the Paris Club repayments and obligations on other foreign loans would become due from the coming year, so there was a need to move cautiously on the economic front.
