KARACHI: Pakistan has for the last two to three years approached the International Monetary Fund (IMF) and agreed to its terms and conditions only to abandon it shortly after receiving the money (tranche), said former finance minister Dr Miftah Ismail, lamenting this as a cause for being unable to get out of the bailout cycle.
Speaking during a panel talk at the15th Karachi Literature Festival (KLF) on Saturday, Dr Miftah said the only way for Pakistan to move forward and fix its economy is to religiously follow the terms it agrees with the IMF.
“The IMF is now wary of Pakistan and it knows that even if we sign the agreement, we have absolutely no intention or willingness to live up to it,” said Dr Miftah, seated alongside former governor of the State Bank of Pakistan (SBP) Dr Ishrat Husain.
Govt unaware of true extent of ongoing economic crisis: Miftah Ismail
The session was titled the ’Book Launch: Development Pathways India-Pakistan-Bangladesh (1947-2022) by Ishrat Husain.
“We have to figure out the way,” continued Dr Miftah who stepped down as Pakistan’s finance minister in September 2022 after a brief stint during the time of the coalition government led by his former party, the PML-N.
“We have to make the right choices. The only way to do that is to live up to a four-year IMF programme in letter and spirit and fix our economy so that we don’t have to go back to the IMF ever again. When you go to the IMF, you are not looking for growth for the next four years. You are looking for a consolidating fiscal position.”
He said that it is the first time that a finance minister – Dr Shamshad Akhtar – has not resisted after receiving a tranche from the IMF.
Otherwise, whenever the IMF releases funds, Pakistan turns away from the conditions – no matter whichever government it is, he added.
“After Ishaq Dar failed to convince the IMF, for the first time in the history of Pakistan, the Prime Minister (Shehbaz Sharif) had to go to the IMF.”
Ishaq Dar has inflicted huge financial dent to Pakistan: Miftah Ismail
Tax the affluent
Dr Miftah and Dr Ishrat were both of the view that the country needed to tax the affluent such as taxing property.
“Property tax of Pakistan is less than that of Chennai,” said Dr Ishrat.
Dr Miftah also said that he was initially against ‘wealth tax’ but now he believes that it has become mandatory to address the fiscal deficit.
Dr Ishrat said the country keeps on jacking up tax rate on the industry, squeezing growth and reducing employment.
Trade with India
Meanwhile, Dr Ishrat said trade with India has great potential – conservatively, it can increase by eight times when compared to 2019 numbers since Haryana and Punjab markets are just an hour away.
“All APIs come from India as Pakistan doesn’t have the courage or talent to make it here. Bilateral trade has huge potential but it depends on the political situation.”
Dr Miftah said that he tried to import vegetables from India amid floods but he didn’t get a favorable response from New Delhi.
“It’s not just Pakistan, India is also reluctant.”
He said that it is always beneficial to trade but with neighbours it is politically as well as diplomatically very important.
Pakistan has hot or semi-hot borders with three of its neighbours, said Dr Miftah.
“This makes us look bad even when we are not. This turns away foreign investors.”