Pakistan in deep economic crisis. Here’s How Much Financial Aid It Needs
Pakistani officials are now reportedly trying to make a last-ditch effort to strike an employee-level agreement with the IMF to bridge the gap in external funding requirements.
Imran Khan, whose claim to political power was based on the promise of a new Pakistan, seems to be backing down on his promise to strengthen the country’s economy, as claimed in a recent media report that Pakistan will now facing its biggest financial crisis. in the history. According to The News International, one of the largest English-language newspapers in Pakistan, the country is in the grip of a deep financial crisis – the Imran Khan-led regime would ideally be expected to gross $51.6 billion within a two-year period. External financing is required (2021-2023) to meet its needs.
According to the report, Pakistan’s gross external financing requirement is $23.6 billion in 2021-22 and $28 billion in 2022-23. The growth comes despite very conservative estimates assessed by the International Monetary Fund (IMF). Pakistani officials are now reportedly trying to make a last-ditch effort to strike an employee-level agreement with the IMF to bridge the gap in external funding requirements.
In a recent report, the World Bank mentioned that Pakistan has joined the list of top ten countries with the largest foreign debt. Citing International Debt Statistics 2022, The News International previously reported that there is a “wide divergence” in the rate at which external debt accumulates in individual DSSI-eligible countries – the group’s largest borrowers including Pakistan. Is. The World Bank report also reported that Pakistan’s external debt increased by 8 percent; In June this year, another report revealed that the Imran government had borrowed $442 million from the World Bank.
However, now with the suspension of program loans from the World Bank and the Asian Development Bank (ADB), Pakistan is at risk of a major economic crisis – with the headache of gross external financing requirement on it – that it needs to deal with. To enter into any agreement with the IMF under the existing $6 billion Extended Fund Facility (EFF) during the ongoing negotiations.
Meanwhile, WB and ADB will continue to give project loans but disbursements fall disappointingly low, taking into account the ability to implement projects. As The News International reports, credit rating agencies may further downgrade the country’s rating, so generating wealth through international bond issuance will become costly.
The IMF was asking to remove distortions in the taxation system and also pointed out that various GST exemptions and rates should be aligned with the standard rate of 17 per cent as per officials quoted by ANI news agency. Petroleum oil lubricants (POL) products should be taxed at 17 per cent. According to the report, the GST rate on fertilisers, tractors and other items should be brought down from the standard rate of 17 per cent. However, Pakistani officials are opposing such proposals, arguing that it would further marginalize the neglected agricultural sector.
Pakistan in deep economic crisis. Here’s How Much Financial Aid It Needs
(Except for the headline, this story has not been edited by News East India staff and is published from a syndicated feed.)
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