Pakistan is on the verge of signing up for another IMF rescue package to bring stability into its economy, which might not prove beneficial for the country in the long term.

Government is going for another $3-5 billion IMF bailout package, with the harshest terms ever, IMF’s macroeconomic stabilisation policy prescription and harsh conditions attached to its funding are generally unpopular because these invariably involve tax hikes, expenditure cuts and exchange rate flexibility, stated Mahfooz Elahi, President, Islamabad Chamber of Commerce and Industry (ICCI) in a statement.

He said that the business community remained wary of and apprehensive at the prospects of IMF’s return because it was suspected that IMF’s rigid and harsh conditions could further slow down the economic growth.

ICCI President said that apart from expenditure cuts and tax hikes, the business and industry could face another round of monetary tightening and currency devaluation while the economy needs just the opposite of such policies. He cautioned that if on the pressure of IMF, soaring of markup rates, new taxes imposed and currency devalued, it would create serious problems for the business and the industry by further raising the cost of doing business and that phenomenon would prove detrimental for the economy.

He said that IMF is ideologically against subsidies, which Pakistan need badly to support the poor suffering under high price inflation. Moreover, if the credit cost is raised further to curb demand, it will also squeeze production, he added.

Mahfooz Elahi said that instead of seeking IMF help, a permanent solution to the country’s economic woes lies in exploiting more resources and then frugally spending them through well-targeted allocations for national projects. He stressed for the need of bringing non-compliant sectors under the tax net so that government could get more revenue from broadening its tax base instead of taxing the existing tax payers.
He also said that government should plug all waste of financial resources as plugging of wasteful expenditure and widening of tax base can go a long way towards putting the country’s economy back on track.

ICCI President emphasized that government should take business community and all other stakeholders on board before resorting to such rescue packages from IMF so that optimum solutions could be found out for reviving the economy. He stressed that the government should negotiate and identify the sources of revenue generation and also as to how it would manage to pay back huge IMF loans and make sure that industrial competitiveness is not suffered in any way by going to the IMF.