IMF imposes yet another strict condition upon Pakistan for bailout package
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ISLAMABAD - The International Monetary Fund (IMF) has imposed yet another strict condition upon Pakistan to avail the IMF bailout package.
Pakistan will have to either cut development budget or the defence budget upon IMF condition.
IMF has asked Pakistan to ensure primary surplus on budget deficit to move ahead with the programme, leaving it with the hard choice of either slashing down its defence or development expenditure.
The budget deficit has to be curtailed within a range of 4 to 5 percent of GDP during the programme period. Moving towards a free float of the exchange rate and hiking power tariff by 22 percent are among other major stumbling blocks to the way of evolving a staff-level agreement between the two sides.
For achieving a primary surplus on the budget deficit front, official sources said the government will have to restrict deficit in such a way that ensures out of total revenues minus total non-interest expenditures within the vicinity of 4 to 5 percent of GDP during the programme period. This indicates that interest payments could only be hiked, while the government will have to make choice between cutting down defense and development spending for achieving reduction in budget.
“So the government will have to make hard choice either to cut down defence or development spending if Islamabad wants to move ahead with the IMF programme,” said the official sources. Pakistan will have to implement all ‘prior actions’ for evolving a consensus on staff level agreement with the IMF otherwise the talks would stall at the present stage.
