October 8, 2018 (MLN): Prime Minister Imran Khan divulged that the government might have to seek the International Monetary Fund (IMF)’s assistance again, in light of escalating fiscal deficits and current account deficits.
During his very first news press conference yesterday, Khan apprised that the government is currently in talks with 3 countries to persuade them to deposit their money in Pakistani Banks in order to boost the national reserves.
He said that the government might have to seek the IMF’s assistance, but it is looking into other options first, i.e. recovering money lost due to money laundering and corruption. However, the steps taken in that direction will take around 6 months to a year to bring about a proper impact.
In 2008, Pakistan’s total debt, accumulated over the years ever since Pakistan had come into existence, was Rs.6000 billion. By 2013, the amount had multiplied my more than twice and five years later, the total debt has touched an alarming height of Rs.28, 000 billion. This is the biggest leap in debt, recorded for such a small span of time.
Moving on, the countries’ external debts stand at $95 billion, while current account deficits have risen from $2 billion in 2013 to $16 billion currently. The circular debt within the power sector stands at Rs.1200 billion.
10 years ago, steel mills had a surplus of Rs.8 billion, however over the time the industries performance slid down a steep slope to the point where it closed down, and is now under a debt of Rs.187 billion.
A glance at these figures, acquaints an individual with the circumstances that Pakistan has come face to face with. Khan remains optimistic that all this country needs is good governance to bring in investors.
Casting a light at the initiatives taken by the government for restoration, Khan said that in order to avoid taking further loans and repay the ones accumulated, price hike is a necessary step. He added that the government is working on improving FBR and broadening tax base.
At present, only 70,000 people with a claimed monthly income of Rs.200 thousand or more are a part of the tax net, out of a population of 220 million people, informed the prime minister. He said that the government is taking restorative measures to recover all the lost money due to corruption.
An Asset recovery Unit comprising of members from the Federal board of revenue (FBR), State Bank of Pakistan (SBP) and Federal Investigation agency (FIA) has been set up to recover money sent abroad. For this purpose, memorandum of understanding (MoU)’s will be signed with Britain, Switzerland and Dubai to avail relevant information from these countries.
Khan emphasized that it will take up to a year for the full impact of these restorative measures to become prominent. Until then, IMF bailout is a possibility, but not the first preference.
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