There's no doubt that, it's because of our ruling class we went to imf in the past, but to say that imf stabilized our economy is ignorance.
https://fp.brecorder.com/2018/07/20180727394052/
IMF again, what for?
The issue in Pakistan is not that of lack of revenue resources as wrongly portrayed by IMF and World Bank, but documentation of economy-ending the culture of tax evasion and fiscal frauds.
The forces representing bazaar [different associations of traders], unscrupulous industrialists, absentee landlords and corrupt civil-military bureaucrats are the impediments. These segments are not ready to pay personal taxes on their colossal wealth and income-in most cases created from undeclared sources.
The prescriptions given by the IMF and/or World Bank will not solve our problems rather further compound them. The rich and mighty segments, identified above, will pass on the burden of sales tax and withholding taxes on the less-privileged and will avoid personal taxation.
In 1990s, the IMF and World Bank caused a crushing death blow to our industry when on their advice we introduced exorbitant sales tax rate of 21 per cent-within a short span of 2 years we had hundreds of sick industrial units. Later on, the rate was reduced to 18%, then 15% -again raised to 16% in 2009 and then to 17%- but the fact remains that heavy indirect taxation has pushed 60 million Pakistanis below the poverty line. We have been warning about the devastating effects of high indirect taxation and excessive burden of withholding taxes. Yet the IMF and the government insisted on these even on low income levels and the result is now before us, there is decrease in voluntary tax compliance as evident from increase in withholding tax regime.
The successive governments have been emphasising the importance of increasing tax revenues, mainly on the dictates of the IMF, but flawed and irrational tax policy has destroyed our economy. In Pakistan, the financial system is for the rich or to lend money to the government, thus, small-and medium-size enterprises (SMEs) do not get credit for growth. In such circumstances, demanding the businesses to pay huge taxes in advance through various withholding provisions, ahead of time, before they even know what their income is going to be, is a sure recipe for economic disaster and this is what is going to be prescribed by the IMF, if the new government decides to go for yet another bailout. What is the alternate?
Pakistan’s IMF Problem
Jul 31, 2018
NADEEM UL HAQUE
In exchange for bailouts over the past three decades, Pakistani governments have repeatedly agreed to draconian spending cuts and arbitrary taxes in pursuit of fiscal targets. As a result, the country's economy is as weak as ever, and its state capacity has been hollowed out.
ISLAMABAD – After Pakistan’s recent election, Imran Khan and his
Pakistan Tehreek-e-Insaf (PTI) party are now
forming a new government. As usual, it will be greeted by an economic crisis. A trip, cap in hand, to the International Monetary Fund seems inevitable.
Pakistan, after all, is an IMF addict. The country has already spent 22 of the past 30 years in a dozen different IMFbailout programs. As the former IMF advisers Ehtisham Ahmad and Azizali Mohammed explained in a 2012
working paper for the Asia Research Center, no American, IMF, or Pakistani official has any incentive to reform Pakistan’s structural economic problems, and so the cycle of bailouts continues.
Unfortunately, few in Pakistan have ever read Ahmad and Mohammed’s paper or debated its significance. If they had, they would know that the IMF’s approach to the country has been a failure. For decades, IMF programs have been undercutting Pakistan’s productivity and growth potential, by eroding governance and state capacity, and creating conditions for ever more rent-seeking and corruption.
Successive IMF programs have required that Pakistan adopt more withholding taxes (never to be refunded), surcharges, and levies on essential goods such as oil and electricity, even though these measures hurt employment and investment growth. And when the government misses its fiscal targets, the Fund and Pakistan’s finance ministry agree on quarterly mini-budgets, which often include new taxes on school fees, bank transactions, Internet access, and so forth.
