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All talk, no plan

ghazi52

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Mar 21, 2007
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,..,

All talk, no plan

BR

The uncertainty on the economic front is growing. The date of the IMF review (expected by the end of October) is yet to be announced (at the time of the writing). PMLN finance czar Dar’s recent Washington visit didn’t yield any fruits. The Fund is asking to manage the primary fiscal deficit at pre-agreed levels. Seeing the slippages, to get to the level, new taxes are to be imposed. The government seems to be frustrated. The planning minister is holding IMF responsible for the lower development spending. It is increasingly appearing that the Fund and government are not on the same page.

Ishaq Dar came with the mandate to bring economic stability and lower the inflation to reclaim the lost political capital of PMLN. But, does he have a plan? IMF wants fiscal consolidation. The government’s intention is to have blanket easing under the garb of flood rehabilitation. IMF asks for targeted subsidies to the poor and affected population. There is a clash.

The government wants to lower the petroleum levy. IMF may like to have GST imposition after reaching PL of Rs50/liter. Currently, its Rs47 on petrol and Rs 7 on diesel. There is significant room for increase in diesel. And after Jan, the government may have to impose GST on petrol. Government is not agreeing on it. Then the government intends to not pass on the deferred FPA on electricity bills. And gas price revision would have to come after January. And till then, gas shortage would make the government’s life miserable.

Overall, the increase in taxes suggested by the IMF are reportedly at Rs600 billion. IMF is not happy with the current FBR tax collection. Due to higher inflation, at the current pace, the tax to GDP will fall and that would disturb the agreed macroeconomic equilibrium. And the government may have to fill in the gaps of personal income tax.

This is going to be tough. However, that doesn’t mean there is no room for flood rehabilitation. The government must pitch it right. Rather the government must have an honest attempt. The external financing gap can be bridged through support for rehabilitation. However, the fiscal spending must be targeted. And IMF is not happy with energy subsidy offered to rich textile. Again, this has to be targeted.

However, the government has not come up with any plan. And that could be the reason for not announcing the date of the review yet. Government cannot delay the review. Repayments are due in higher amounts. The recent money that came from the ADB is repositioning of existing pipeline. Don’t expect anything from the World Bank without the IMF review. The commitments Miftah got from the friends are perhaps gone with him.

The wait is ongoing for the upcoming review of the IMF. The vibes are that in Washington, IMF reiterated on what has been agreed and what is required to be done. Dar and team should start taking actions before the markets begin to lose confidence.


 

Hexlor

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If the PDM parties were smart enough to develop a plan we would have a GDP of over $1 Trillion by now. They've ruled Pakistan for over 30 years now. Anyone with a single brain cell knows these guys don't have a plan and they never will have one. All they are trying to do right now is save their corrupt butts by eliminating the cases that have been filed against them.
 

Zarvan

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The most corrupt people whose examples are given as epitome of corruption can never bring any solution. Anyone who thinks that can happen has to be mentally retarded or equally corrupt.
 

Maula Jatt

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if it wasn't for constant establishment meddling (or ADHD), geopolitical blunders and the political class of the 90s (Zardari, Sharif types) fighting it out

we would be a trillion $ plus economy by now
 

epebble

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All talk, no plan

BR

The uncertainty on the economic front is growing. The date of the IMF review (expected by the end of October) is yet to be announced (at the time of the writing). PMLN finance czar Dar’s recent Washington visit didn’t yield any fruits. The Fund is asking to manage the primary fiscal deficit at pre-agreed levels. Seeing the slippages, to get to the level, new taxes are to be imposed. The government seems to be frustrated. The planning minister is holding IMF responsible for the lower development spending. It is increasingly appearing that the Fund and government are not on the same page.

Ishaq Dar came with the mandate to bring economic stability and lower the inflation to reclaim the lost political capital of PMLN. But, does he have a plan? IMF wants fiscal consolidation. The government’s intention is to have blanket easing under the garb of flood rehabilitation. IMF asks for targeted subsidies to the poor and affected population. There is a clash.

The government wants to lower the petroleum levy. IMF may like to have GST imposition after reaching PL of Rs50/liter. Currently, its Rs47 on petrol and Rs 7 on diesel. There is significant room for increase in diesel. And after Jan, the government may have to impose GST on petrol. Government is not agreeing on it. Then the government intends to not pass on the deferred FPA on electricity bills. And gas price revision would have to come after January. And till then, gas shortage would make the government’s life miserable.

Overall, the increase in taxes suggested by the IMF are reportedly at Rs600 billion. IMF is not happy with the current FBR tax collection. Due to higher inflation, at the current pace, the tax to GDP will fall and that would disturb the agreed macroeconomic equilibrium. And the government may have to fill in the gaps of personal income tax.

This is going to be tough. However, that doesn’t mean there is no room for flood rehabilitation. The government must pitch it right. Rather the government must have an honest attempt. The external financing gap can be bridged through support for rehabilitation. However, the fiscal spending must be targeted. And IMF is not happy with energy subsidy offered to rich textile. Again, this has to be targeted.

However, the government has not come up with any plan. And that could be the reason for not announcing the date of the review yet. Government cannot delay the review. Repayments are due in higher amounts. The recent money that came from the ADB is repositioning of existing pipeline. Don’t expect anything from the World Bank without the IMF review. The commitments Miftah got from the friends are perhaps gone with him.

The wait is ongoing for the upcoming review of the IMF. The vibes are that in Washington, IMF reiterated on what has been agreed and what is required to be done. Dar and team should start taking actions before the markets begin to lose confidence.


One way out of this conundrum is conservation on imported Petroleum and products. No private petroleum consumption except when essential should be the norm. Without stabilization on petroleum imports, tailspin appears inevitable.
 

TNT

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Daaku dar is only here to take away more of stolen money abroad. The generals see him as an asset that can help them with the money they have gathered.
 

epebble

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Daaku dar is only here to take away more of stolen money abroad. The generals see him as an asset that can help them with the money they have gathered.
I know he is not popular around here, but he is managing the situation admirably, considering the cards he has been dealt. Keeping calm and avoiding panic is the order of the day. I will give him full marks.

Besides, mercifully, there is nothing to steal. So, that fear is unwarranted.
 

AlKardai

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Better call saul in real life
1667320491770.png
 

SIPRA

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Mir Bajwa & Co. don't give a damn to Pakistan. Pakistan can go to hell, as far as they are concerned.
 

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