Pakistan accepts 11 IMF conditions

[asaad-ul-islam]

Some info on non development expenditures.

http://www.dsp.dla.mil/APP_UIL/displayPage.aspx?action=content&accounttype=displayHTML&contentid=21



NDI(nondevelopmental item) refers mainly to R&D. Both civilian and military.

But, here the congress is referring to DoD or the Department of Defense in the US.

that's no problem at all. Zardari and the new democratically elected govt. already cut funding to our strategic R&D programs and our ballistic missile program a while ago.

 

[fatman17]

so any idea what pakistan's defence budget will be in the next fiscal year? by what percentage will it be lowered?

3-5% in real terms.~US 250m.

 

[Always Neutral]

Pakistan halts building of army HQ as bankruptcy edges closer - Telegraph

Pakistan halts building of army HQ as bankruptcy edges closer
Pakistan has been forced to halt the construction of lavish new military headquarters in Islamabad as the nuclear-armed nation desperately fights to stave off bankruptcy.

By Nell Raven in Islamabad
Last Updated: 2:10AM GMT 29 Oct 2008

The move by General Ashfaq Kayani, the country's army chief, was widely seen as a message to President Asif Ali Zardari, who faces calls to bring back millions of dollars that his family allegedly has in foreign bank accounts.

The military was due to complete its unpopular move from the garrison city of Rawalpindi to the capital Islamabad by 2012, at a cost of more than £475m.

"The army chief has taken this decision in view of the economic situation in the country," chief Pakistani military spokesman Maj Gen Athar Abbas said.

A military statement said that Gen Kayani, who took over from former President Pervez Musharraf as army chief last November, was "cognisant of the financial crunch being faced by Pakistan".

The new headquarters complex had prompted complaints from ordinary Pakistanis because of its huge cost, its site on a chunk of prime real estate and the likelihood that it would be targeted by militant attacks.

Pakistan, a key ally in the US-led "war on terror", is in talks with the International Monetary Fund to secure up to £3.2bn and has discussed with the United States a loan of £10bn to avoid defaulting on its foreign debts.

It has also been hit by skyrocketing inflation, while the stock market and the Pakistani rupee have both collapsed since the start of the year.

German Foreign Minister Frank-Walter Steinmeier said on a visit to Islamabad that Pakistan must secure IMF funding within six days to avoid a financial crisis.

The economic troubles have piled pressure on the government of Mr. Zardari, the widower of slain former premier Benazir Bhutto, who also faces a surge in violence by Taliban and Al-Qaeda militants near the Afghan border.

Gen Kayani's attempt to show that the powerful military feels the pain of Pakistan's 170 million people follows calls by opposition leaders for Mr Zardari and other politicians to bring foreign currency deposits back home.

Unlike previous army chiefs, who have ruled Pakistan for more than half its existence, Gen. Kayani has publicly kept out of politics but still wields a powerful behind-the-scenes influence.

 

[DarkStar]

The freezing of the defene budget, will in itself mean a reduction in real terms, as the rupee will be devalued.

Agri tax will be a disaster, and raise inflation.

Putting up interest rates will slow growth.

An utter disaster. I am in despair.

No need to analyse this. Pakistan is in the grip of a loan shark.

Lets pray for a lifeline.

 

[blain2]

As bad as it looks and sounds, if done right, it can be a good thing. Guys lets think about this.

If IMF support is all bad and pushes for cuts everywhere including the gravy train known as PSDP (which is typically what every single Pakistani government showcases as the work it has done to improve the lot of the country), then I am sure Zardari and dunce are fully aware what sort of issues it can raise for them and the PPP government in the future (remember there is Zardari junior waiting to take over the country). So cuts everywhere is not a good thing for them, however under IMF's strict guidelines, what you may see is some of the fat (also known as Haraam Khori) be trimmed from government departments that have taken on more manpower than they need. With subsidies not forthcoming, it would be very hard for the government and such departments to carry on with such useless largess for the non-gainfully employed.

I know for a fact that the Pakistani armed forces can also cut a lot of fat. Extravagance has crept in quite a few areas and if the higher command really wants to, it can arrest the impact of freezing of the defence budget or some scale back. What will NOT happen is the scaling back of funding for strategic programs, even if Zardari and his papa want this to happen. Within the Armed Forces, the anti-rollback lobby is very strong and more importantly, there is immense public support for this program to be carried on. In the short term, there could be impact to some of the procurement programs, however what we also have to keep in mind is that until and unless Zardari and dunce totally screw up things (as in the 90s), the economy is large enough (easily double the size of the economy of the 90s) to provide room for procurement in the future.

All is not lost on the work done by the previous government. The basic framework setup for many of the sectors such as banking etc. is intact and this allows for eventual growth for the country. The taxation in my opinion is the best thing that could be imposed on our country. The excuse that "I do not want to pay taxes to the government because I know they will squander it" just does not cut it any longer! Regardless of theft, taxes must be collected and the tax base must be expanded. There is absolutely no hope for a country of 160 million that is unable to draw revenue from its greatest asset (the population!!). As hard as this may be for Pakistanis to do, they have to if they want to get over this IMF drama and the periodic "daurray" to friendly countries asking for a bailout. Its not only humiliating, but also downright shameful for a country with such an immense population, immense talent and knowhow yet has to go and beg others. Yeh hai marnay kaa maqaam!!!!

The IMF conditions are very pro-market which is a good thing in the long run as long as things are done right. The downside of all this is that in the short term, the people are going to feel it. Subsidies will be removed and this will hurt the common people. How bad? That has to be seen. My own take is that Pakistani economy has strong fundamentals. It is still chugging on even though the government is having to deal with this balance of payment issue. If, and I hope and pray for this, there is any sense in Zardari, he would ensure that this happens the right way and Pakistani economy is allowed to grow unhindered. He has everything to lose if this goes haywire and the economy suffers further.

 

[fatman17]

the tax base needs to be enlarged. with a population of 170m, only the salaried classes are taxed on their incomes. only MNC's operating in the country, pay their proper taxes, the rest are busy in "evading" taxes because the IT authorities are corrupt. the landed gentry (feudals, jagirdars) dont pay any taxes of any kind because they fudge their agricultural production and incomes. there are 1m farmers in pakistan but they control 10% of the land. 100,000 farmers control the other 90%. so Darkstar, respectfully, i dont agree with you on agri-tax. if the govt. sincerely inplements just this tax, it will increase the govt's resource generation by 25-30% and this is a significant figure. all tax collection on a yearly basis is Rs, 700 bill. add the agri-tax and you get a massive Rs, 210 bill additional tax. if this is accomplished, the IMF will gladly give us loans on easier terms.
blain2, the armed forces also need to cut the fat in many non-combat areas, but stopping construction of the new GHQ is not.
finally use NADRA data along the lines of the US social-security number, to improve tax-collection. there are 70m NIC's issued to people of all walks of life. hardly anyone pays any tax.
if everyone pays their dues, inflation will reduce, the govt. resources will be spent to improve the lot of the people. schools, hospitals, roads, drinking water, law and order.

 

[Neo]

that's no problem at all. Zardari and the new democratically elected govt. already cut funding to our strategic R&D programs and our ballistic missile program a while ago.

Don't worry about that, there's no cut in the socalled 'black projects'.

 

[blain2]

blain2, the armed forces also need to cut the fat in many non-combat areas, but stopping construction of the new GHQ is not.

Fat sir,

I am not suggesting that one project here and there is the way to cut down on the fat. I am not even sure if this new GHQ is the fat as the need for it has been there for over 3 decades now. It actually may make more sense to have this new location but there are other areas where the cut backs can happen. I do not want to see the Armed forces get a spending cut, however I think if some of the excess is trimmed, more money can be allocated to capital expenditures instead of useless stuff being spent on protocol/accommodations etc.

 

[muse]

Gentlemen the point is not that IMF assistance is bad, rather the point is how we came to this point - how in the first 6 months of the so called democractic government engaged in record borrowing - what is the reason the Chinese do not trust of this govt is telling it, why do the Saudi and the Emirati do not believe them.

Just like during Z.A Bhutto's regime and the so called "mohtarma's" regime, we are in reality witness to a vicious kleptocracy that keeps the population busy with idiot notions of soverignty while the architecture of wealth transfer is instituted.

You will not Pakistan has the lowest Tax to GDP rate in the World, not just in South Asia but the world - what's wrong with this picture

 

[fatman17]

the tax base needs to be enlarged. with a population of 170m, only the salaried classes are taxed on their incomes. only MNC's operating in the country, pay their proper taxes, the rest are busy in "evading" taxes because the IT authorities are corrupt. the landed gentry (feudals, jagirdars) dont pay any taxes of any kind because they fudge their agricultural production and incomes. there are 1m farmers in pakistan but they control 10% of the land. 100,000 farmers control the other 90%. so Darkstar, respectfully, i dont agree with you on agri-tax. if the govt. sincerely inplements just this tax, it will increase the govt's resource generation by 25-30% and this is a significant figure. all tax collection on a yearly basis is Rs, 700 bill. add the agri-tax and you get a massive Rs, 210 bill additional tax. if this is accomplished, the IMF will gladly give us loans on easier terms.
blain2, the armed forces also need to cut the fat in many non-combat areas, but stopping construction of the new GHQ is not.
finally use NADRA data along the lines of the US social-security number, to improve tax-collection. there are 70m NIC's issued to people of all walks of life. hardly anyone pays any tax.
if everyone pays their dues, inflation will reduce, the govt. resources will be spent to improve the lot of the people. schools, hospitals, roads, drinking water, law and order.

IMF spurs Pakistan to tackle tax evasion

By Farhan Bokhari in Islamabad

Published: November 3 2008

Pakistan will make significant efforts to improve its taxation system in the next 12-18 months, including taking politically unpalatable steps such as taxing the incomes of influential land owners and plugging loopholes to curb large-scale evasion, the country’s de facto finance minister has said.

Pakistani officials and a technical team of the International Monetary Fund last week concluded discussions in preparation for Pakistan formally seeking an IMF loan, which economists say is central to stemming a continuing economic slide and depleting foreign currency reserves.

The Pakistani government has said that tax reforms are part of the country’s domestic economic agenda and are not driven by IMF conditions, but economists believe that resolving chronic problems in the tax collection system will strengthen Pakistan’s case for a new IMF programme.

“We have our own compulsions which we have to meet. Making everyone pay their taxes is in our interest,” said Shaukat Tarin, the prime minister’s adviser on finance and the de facto finance minister, in a Financial Times interview.

“Reforming the tax collection structure is central to our economic policies.”

Mr Tarin refuted suggestions that tax reforms would fail in the face of resistance from powerful lobbies and said he had the backing of Asif Ali Zardari, the president, “to do everything possible to carry forward economic reforms”.

Under expected changes, farm owners will for the first time face the prospect of paying an income tax on their earnings, something they have successfully blocked, thanks to their political influence.

The plan also involves bringing those business people and industrialists into the tax net who either completely evade their income tax payments or pay a sum which is far below their dues.

Mr Tarin promised to raise the tax to gross domestic product ratio to at least 15 per cent in the next five years “through making sure that we tackle evasion and make everyone pay their dues. This is essential for our economic future”.

Pakistan’s tax to GDP ratio is only 10.5 per cent and less than 1 per cent of the country’s population of 165m pays income tax.

Western economists said improving tax collections would be an essential test of Pakistan’s ability to press ahead with economic reforms and overcome resistance from powerful interest groups.

Copyright The Financial Times Limited 2008

 

[Always Neutral]

IMF spurs Pakistan to tackle tax evasion

By Farhan Bokhari in Islamabad

Published: November 3 2008

Pakistan will make significant efforts to improve its taxation system in the next 12-18 months, including taking politically unpalatable steps such as taxing the incomes of influential land owners and plugging loopholes to curb large-scale evasion, the country’s de facto finance minister has said.


Western economists said improving tax collections would be an essential test of Pakistan’s ability to press ahead with economic reforms and overcome resistance from powerful interest groups.

Copyright The Financial Times Limited 2008

Dear Fatman and Others,

This shows the positive effect IMF is having on the economy. Also the ammount of pre-conditions being put on Pakistan only shows how well Gen M and Gang and now Zardari and Gang have cooked the books for public consumption hiding the rot which had set in many years ago. Iceland got its IMF loan in one week and compare that with the way IMF is treating Pakistan.

Its better to swallow the bitter pill now than go the Afghanistan / Somalia way. I am sure with transparency the overseas Pakistanis will flood back with investments and stabilise the economy. In 5 years I see Pakistan back on its feet with a robust economy and much less fundamentalism. It can easily overtake India in most parameters in 10 years.

However Pakistanis must also accept that their offensive capabilities will be severely curtailed (such as project U 214 etc) but Pakistan itself will be saved.

Regards

 

[Always Neutral]

that's no problem at all. Zardari and the new democratically elected govt. already cut funding to our strategic R&D programs and our ballistic missile program a while ago.

Dear Assad,

After reaching MAD threshold against India why do you need more especially when the people are starving.

Regards

 

[fatman17]

Dear Fatman and Others,

This shows the positive effect IMF is having on the economy. Also the ammount of pre-conditions being put on Pakistan only shows how well Gen M and Gang and now Zardari and Gang have cooked the books for public consumption hiding the rot which had set in many years ago. Iceland got its IMF loan in one week and compare that with the way IMF is treating Pakistan.

Its better to swallow the bitter pill now than go the Afghanistan / Somalia way. I am sure with transparency the overseas Pakistanis will flood back with investments and stabilise the economy. In 5 years I see Pakistan back on its feet with a robust economy and much less fundamentalism. It can easily overtake India in most parameters in 10 years.

However Pakistanis must also accept that their offensive capabilities will be severely curtailed (such as project U 214 etc) but Pakistan itself will be saved.

Regards

well put but please convince me how the very people (land-lords and jaghirdars) the IMF wants to tax will accept such conditions when they have been living off the land forever and which by the way they consider as their right!

 

[blain2]

Dear Assad,

After reaching MAD threshold against India why do you need more especially when the people are starving.

Regards

Because of the possibility of limited but intense conflicts thanks to "Cold Start".
There are multiple rungs between a limited conventional conflict and an all out nuclear conflict. Impairing Pakistan's conventional capabilities in the face of a limited conventional war is inviting a nuclear catastrophe.

 

[blain2]

well put but please convince me how the very people (land-lords and jaghirdars) the IMF wants to tax will accept such conditions when they have been living off the land forever and which by the way they consider as their right!

Its unfair to ask AN to convince anyone . The only way it will happen is by the "dunda". If the government servants have been paying their taxes, what are the excuses that the landowners can hide behind? In the past, this debate was never allowed to take place, now under severe economic constraints things are being forced. I think these free loaders will be brought under the tax net, the problem will be enforcement (which is an issue in pretty much all of the third world including India).