What is the major demands of IMF to Pakistan? - Economist Shahbaz Rana's Analysis - video Dailymotion

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00:00 According to Shabaz Radha, the main purpose of the IMF visit was to assess the budget preparations for Pakistan.

00:12 According to the government official, the IMF wanted to see whether Pakistan's next financial year's economic development

00:19 is in line with the overall objective of ensuring the stability of the financial and foreign sectors.

00:26 The IMF mission has given tough time to the government on monetary and tax policies.

00:32 The implementation of the IMF conditions will put an extraordinary burden on the people and some bilateral relations may be affected.

00:40 It will be decided only after the implementation of the IMF conditions whether Pakistan should be included in the program or not.

00:47 According to the Pakistani government, the IMF has not accepted their position on financial data and monetary policy.

00:53 The government tried to end the IMF loan program as soon as possible.

00:59 But the IMF has denied any future agreement with the approval of the upcoming budget.

01:05 That is why the IMF mission has left Washington without handing over the new bailout package to the government of Pakistan.

01:11 According to another news, all the IMF issues including expensive electricity,

01:17 medicines and 18% sales tax have been put in a difficult position by the government of PM Shabaz Sharif.

01:26 According to the sources, PM Shabaz Sharif has not allowed the immediate implementation of the IMF tax on the budget.

01:33 Instead, he has instructed the Ministry of Treasury to prepare again.

01:38 The IMF mission has left but before leaving, let's quickly look at their announcements.

01:43 According to the IMF announcement, the Pakistani government has agreed to a staff level agreement

01:48 on the joint economic policy and reform program between the Pakistani government and the IMF.

01:53 The IMF has said that the issues will be further addressed on the basis of the financial settlement obtained through the successful completion of the 2023 standby agreement.

02:03 The announcement has clarified that the Pakistani government will continue to have virtual talks on the policy,

02:08 which aims to give a final look to the new program.

02:11 The IMF said in its statement that the purpose of the reform program is to take Pakistan towards economic recovery and solid growth.

02:19 The IMF has stated that Pakistan will have to increase the fiscal system of tax collection along with other steps for economic recovery.

02:29 Reading the words of the Minister, I was a little relieved that if tax is to be imposed, then perhaps it will be imposed on those sectors which are still out of this bracket.

02:43 Shabaz Rana is a senior correspondent of Express Tribune.

02:46 We will talk about his story.

02:52 Shabaz, you said that there are some obstacles, some things are not being understood about the specifics of the IMF, especially in terms of increasing the prices.

03:07 Is this a very serious matter or can the matter stop here? Is it also a possibility that the IMF program should not continue?

03:16 Bismillahir Rahmanir Rahim. The IMF understands one thing very well that this government has no other way than to take the IMF program.

03:28 This is the reason that the Minister of Treasury, Mohammad Aurangzeb, has said this immediately after coming back from Washington.

03:36 When there was a public event, he said that when there are talks in the IMF program, there is no plan B.

03:44 This is a very important thing.

03:46 We are presenting ourselves in front of the IMF that we do not have any plan B, so we are ready to program.

03:53 The IMF is not a charity organization. The IMF does not work only on economic merit.

04:00 The IMF is said to be an extension of the US State Department in many cases.

04:07 If you look at the political position of the government in the background, and the conditions that the IMF is proposing to implement in Pakistan,

04:18 what can be the political and social cost of it, then this visit has been made in all respects.

04:25 In the last sentence of the opening paragraph of the same press release, it is written that the mission will go back and prepare a report.

04:36 The report will be presented to the IMF board after the approval of the IMF management.

04:43 The board will discuss and make a decision on it.

04:47 This is a very important sentence. This does not happen normally.

04:53 The IMF goes to the board of the IMF when the staff level agreement is made.

04:59 After the staff level agreement, the approval of the board is taken.

05:03 Here, the IMF has said in its announcement that we will go to the board first, inform the board of all the circumstances in its report,

05:11 and then the board will decide to make a staff level agreement.

05:14 This is quite a unique and unusual situation.

05:18 For example, the IMF board says that the political situation in Pakistan has increased,

05:27 and the government has to meet a lot of conditions.

05:30 If the conditions are difficult, then the government will implement the conditions first, and then the government will decide what to do.

05:35 Yesterday's meeting was probably unbelievable for the Prime Minister.

05:46 The increase in electricity prices was accepted, and there was a debate in the media.

05:55 Now, the conditions have come up with regard to taxation, which is not so unusual.

06:00 Maybe the Prime Minister has received a comprehensive briefing for the first time.

06:03 Usually, the IMF wants to end the tax issue.

06:07 Now, the recommendation they have made means that apart from a few basic food items,

06:12 you will have to pay 18% GST on everything that is sold in Pakistan.

06:19 This will be a social and political cost.

06:22 Will the Prime Minister be ready to pay this?

06:24 If he is ready, then maybe your IMF program will be done after the budget.

06:29 What will happen next?

06:33 Will the PM make a report and approve it?

06:36 Will he observe the budget of Pakistan?

06:39 Will the PM implement the conditions that are presented by the PM?

06:44 Will this program continue after that?

06:47 Is this a correct understanding?

06:49 The IMF will closely monitor two or three basic things.

06:54 First, what is the budget that will be presented in the Parliament and what is the budget that is approved by the Parliament.

06:59 And then, all the taxes that are exempted,

07:02 which means that 18% GST on everything, including spices, grains, cars,

07:11 and many other things where the rate of sales tax is low,

07:14 this is the biggest condition.

07:16 Second, I think there will be a precondition or a prior action,

07:21 that from July 1, the annual increase in electricity prices.

07:25 I read about this in the newspaper of NEPRA,

07:29 where they are saying that the unit increase will be from Rs. 0.75 to Rs. 0.75.

07:34 These are the various scenarios that are presented in NEPRA.

07:37 The implementation of NEPRA's approval from July 1,

07:40 and the adjustment in the price of gas,

07:43 these will be two or three basic conditions.

07:45 The situation of electricity will be presented to you.

07:48 And then, taxes are the thing that is to be seen.

07:51 Here, the IMF is at the level of the government.

07:53 If all these things happen, and to the satisfaction of the IMF,

07:58 and the executive board of the IMF also allows that go and make a staff-level agreement with Pakistan,

08:02 then your staff-level agreement will be made.

08:04 And if any of these things are missing,

08:06 and the IMF's satisfaction level is low or not,

08:09 then it can take time.

What is the major demands of IMF to Pakistan? - Economist Shahbaz Rana's Analysis

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