IMF Programme
KARACHI: The Pakistan Business Council (PBC) is urging the International Monetary Fund (IMF) to consider a more extended five-year funding programme, as opposed to the typical three-year arrangement, as the upcoming government faces escalating economic challenges and seeks a fresh bailout.
PBC Chief Executive Ehsan Malik emphasized that a prolonged program would provide the IMF with the opportunity to link tranche releases to substantial progress in fundamental reforms, particularly in the energy sector and the privatization or closure of state-owned enterprises operating at a loss.
The PBC contends that, in addition to the financial burden, inefficiently run state-owned enterprises create unfair competition for the private sector, hindering scalability and competitiveness.
Malik, in a letter to the IMF’s Resident Representative in Pakistan, Esther Perez Ruiz, stressed the need for debt restructuring to restore confidence in the economy and advocated for a more reform-centric approach in the new program.
Malik acknowledged the historical challenges faced by previous IMF programs, attributing their failures to a lack of political will from various governments. He urged the IMF to move away from short-term quantitative targets and adopt a mix of medium-term quantitative and qualitative goals.
Malik also highlighted concerns about the taxation system, suggesting a focus on “tax from new taxpayers” to ensure equitable and sustainable revenue increase, prompting significant restructuring of the Federal Board of Revenue.
Furthermore, the PBC criticized the IMF’s tariff-driven measures for addressing symptoms but failing to cure fundamental defects in the energy sector.
Malik outlined issues such as high electricity costs, inefficiencies in transmission, theft, non-recovery of dues, and inadequate transmission systems hindering the utilization of cheaper renewable and coal power.
The PBC called for a more comprehensive approach to address these structural issues and create a conducive environment for economic growth and sustainability.
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