SUMMARY of the Article “IMF misses the mark yet again,” Dawn, October 18th, 2024

The editorial critiques the recent approval of Pakistan’s 24th IMF programme, highlighting its reliance on a simplistic cash-based accounting framework that fails to address the country’s structural issues. The authors, Nadeem ul Haque and Shahid Kardar, argue that the programme primarily rolls over existing debts without implementing meaningful reforms. There is skepticism regarding the programme’s approach to achieving a primary surplus, as it includes inflated revenue numbers from the State Bank that do not accurately reflect economic reality. The piece emphasizes the unrealistic expectations placed on exporters and farmers regarding documentation requirements overnight, without acknowledging their limited capacities. The authors note a misplaced focus on revenue generation rather than on establishing a sound fiscal structure, which has led to an unstable business environment and a culture of tax evasion. The editorial outlines how the convoluted tax regime, characterized by arbitrary taxes and high documentation burdens, has created distrust between the government and citizens. Moreover, government expenditures have spiraled out of control, with a proliferation of agencies and functions that the state undertakes without clear accountability or cost assessment. The commentary underscores the detrimental impact of government price controls on economic dynamics, noting that these controls affect 70% of the economy, thus hampering market competitiveness. The authors assert that despite the IMF’s mandate for an open exchange system, each programme has resulted in an appreciated exchange rate, further straining the » Read More…