New Delhi, Dec 11 The International Monetary Fund’s approval of a $1.2 billion tranche for Pakistan will help the country avoid immediate default on foreign debt repayments but is unlikely to ease the squeeze on mainstream households, a new report has stressed.
The IMF’s ongoing $7 billion loan has provided a critical lifeline, yet remaining “afloat” does not address its trade deficit, impending foreign-exchange crisis and other deep structural problems, the report from The News International said.
The data in November showed that Pakistan’s trade deficit widened sharply by 33 per cent to $2.86 billion from a year earlier, driven by falling exports and rising imports amid subdued economic growth.
The additional economic pressure this year was triggered by widespread losses to Pakistan’s agriculture, caused by large-scale destruction to farms following heavy rainfall and floods during the summer. With forecasts predicting a significant rise in rainfall next summer, Pakistan’s agricultural journey is set to remain troubled, the report noted.
A new vision for the future must be built upon resolving Pakistan’s internal political discord, which has rapidly fuelled economic uncertainty in recent years.
Internal political divisions have overshadowed long-term prospects for the economy, the report said, adding that Pakistan must immediately suspend its unnecessary infrastructure projects.
Subsequently, a fundamental review of each project for building new roads or other brick-and-mortar projects must be carefully undertaken to assess their utility for Pakistan in the short to medium term, it suggested.
The report urged that the government should assume further debt only for essentials such as population control or building safeguards against climate change.
Given that a large part of Pakistan’s population remains uneducated, a rapid shift towards industrialisation remains the missing piece for the foreseeable future, it noted.
Pakistan must move decisively to revamp its tax collection system as tax officials have frequently reported their failure to meet their collection targets, the report noted.
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