Lahore
\nThe Purpose of the IMF program is to promote macro-economic stability in Pakistan, said ident Representative of International Monetary Fund (IMF) Esther Perez Ruiz on Tuesday.
\nThe Fiscal Policy and Monitory Policy should promote and further the same vision.
\nThese were the views of Resident Representative of International Monetary Fund (IMF) Esther Perez Ruiz while speaking at the Lahore Chamber of Commerce and Industry.
\nPresident LCCI Mian Nauman Kabir, Vice President Haris Ateeq and the LCCI Executive Committee Members were present on the occasion.
\nEsther Perez Ruiz further said that the aim of the IMF program is to bring a set of policies in Pakistan that can promote sustainable and inclusive policy growth.
\nThe representative said Pakistan\u2019s Tax to GDP ratio is very low, the purpose of eliminating sales tax exemptions through the recent finance act is to reduce the complexity in the taxation system.
\nShe said that Pakistan should not only look to take measures related to tax but there are other ways to enhance the competitiveness of the economy.
\nLCCI President Mian Nauman Kabir said that being the premier business support organization of the country, LCCI is quite sensitive about the impact of Pakistan\u2019s ongoing 22nd IMF Program on the national economy and particularly on the private sector growth. Hopefully, we will witness the successful completion of this program as well just like the 21st program.
\nHe said that this meeting will give the IMF an opportunity to understand the perspective of the business community about the ongoing IMF program. Secondly, it gives us a chance of developing a better understanding of IMF policies and also know about the major success stories related to IMF programs adopted by other countries.
\nHe said that there is a need to widen the tax base by bringing more people into the tax net rather than burdening the existing taxpayers. He said govt has the data of all the industrial and commercial electricity connections which can be used to broaden the tax net.
\nHe said that we are well aware of the fact that Pakistan has just received the tranche of around 1 Billion Dollars from IMF under the Extend Fund Facility for Pakistan, following the successful completion of the 6th review. This takes the total disbursements under the IMF Program to around 3 Billion Dollars.
\nIn recent decades, many developing countries including Pakistan have resorted to loan programs of the IMF. Given the broad reach of IMF programs, it is important to analyze the impact of these programs for economic growth and other dimensions of economic performance, he added.
\nPresident LCCI said It is also imperative to see if the developing countries benefit from access to IMF programs or would the countries be better off if these programs did not exist. It has been observed repeatedly that IMF programs often result in interest rate hikes, devaluation of the local currency, and consequently high inflation.
\nThe IMF conditions also include a hike in the power tariffs and an increase in taxation rates. One recurring theme that has been observed is that IMF packages only help overcome immediate financial difficulties but do not address their root causes.
\nIn the context of Pakistan, these measures have the effect of increasing the cost of doing business and hampering the competitiveness of our private sector which is already facing stiff economic challenges.
\nHe said to fulfill the conditions of the IMF Program, the Government has recently withdrawn the Sales Tax exemptions on imported plants and machinery through the mini-budget. This measure would make it difficult for our industrial sector, particularly SMEs to undertake technology up-gradation and hence the export competitiveness of our Industrial sector would be adversely affected.
\nHe said LCCI has always advocated for stability in the exchange rate. The massive and abrupt devaluation that has taken place in recent times has resulted in an exorbitant increase in our import bill with minimal benefit to exports. Since July 2019, when Pakistan entered the recent IMF Program, a devaluation of more than 10% has taken place.
\nFurthermore, in the period leading up to the commencement of the recent IMF Program (Aug 2018 \u2013 Jul 2019), a devaluation of around 28% took place, adding that as a result of devaluation, the trade deficit has increased exorbitantly.
\nIn the first seven months of the current financial year, the imports have surpassed 46 billion dollars which are 58% higher as compared to the same period in the previous financial year taking the trade deficit to 28 Billion Dollars.
\nThis has contributed to pushing the inflation rate to 13% in January 2022. Since our industries are heavily reliant on imported raw materials and machinery, the abrupt devaluation disrupts the entire business cycle.
\nLCCI Vice President HarisAteeq endorsed the documentation of the economy and said that the businesses are documented and are in the tax net. Those businesses\u2019 tax rates should be reduced.<\/p>\n","protected":false},"excerpt":{"rendered":"
Lahore The Purpose of the IMF program is to promote macro-economic stability in Pakistan, said ident Representative of International Monetary Fund (IMF) Esther Perez Ruiz on Tuesday. The Fiscal Policy and Monitory Policy should promote and further the same vision. These were the views of Resident Representative of International Monetary Fund (IMF) Esther Perez Ruiz […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-243445","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"\n