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Tough terms of IMF increase inflation in Pakistan, PM Imran bothers

Friday - June 14, 2019 1:58 pm , Category : WORLD
Pakistan at the verge of being the defaulter if circumstances not improved
Pakistan at the verge of being the defaulter if circumstances not improved

Imran Khan seeks sacrifice from the Pakistanis for the economy to back on track

JUNE 14 (WTN) - The economy of Pakistan, which is passing through the worst economic condition till now, is going through the litmus test this time. To protect the economy of the country from being destroyed, accepting the terms of the IMF is proving to be torture with the people of Pakistan. In the coming days, the Pakistanis may have to face a lot of financial problems including inflation, and the troubles are also such that they have never imagined.

We are saying that because the Imran Khan Government of Pakistan has given a shock of inflation to the people of the country in its first full-time budget. For your information, let you know that the Pakistan Government has imposed many new types of tax in the budget and has made many rigorous policies. For the next financial year, Pakistan's budget has announced an ambitious target of $ 36.5 billion tax revenue, which is 30 per cent more than the previous year.

Not only this, the Imran Khan Government has increased the maximum rate of income tax from 25 per cent to 35 per cent and had also increased the tax slab. Imran Khan's Government, which came to power in last year, has no money to spend. In order to raise tax revenues, the Government of Pakistan has already increased rates of gas and electricity. The condition is that now the mobile phone scratch card has also been taxed.

In the coming days, the people of Pakistan may have to face many difficulties on the economic front. This can be judged by the fact that Imran Khan has asked the nation while addressing that the people of the country will have to cooperative for the nation. Imran Khan, giving an example of self, has made a passionate appeal to the countrymen to be sacrificed for the betterment of the economy. To bring the economy back on track, the Imran Khan Government is reducing its budgetary trade deficit and on the other hand, trying to save the economy from being default by increasing the tax. But with this step of Imran Khan Government, inflation in Pakistan is going to increase to record level.

As you know, Pakistan has taken a bailout package of $ 6 billion from the IMF. According to the terms of the bailout package, the Pakistan Government will have to definite the economy. Actually, the expenditure of the Pakistan Government is much higher than its income. At the same time, the import of Pakistan has increased steadily in the last 10 years internationally, while exports are in the same place.

Due to this business imbalance, the Treasury of Pakistan has completely been empty, which has led to a crisis of payment for import of essential items including crude oil and foreign debt. If Pakistan's Treasury does not fill with the dollar quickly, then Pakistan can be declared a defaulter.

For the loans given to Pakistan, the IMF has laid down stringent conditions, including reducing expenditures of governance from the government and increasing tax revenues. According to the law of economics, when the economy gets accelerated, trade increases, which create more jobs. People are promoted in their jobs in this order and their expenses increase due to increase in wages, and due to these imports from abroad increases. But at the same time when the economy shrinks, it is completely reversed.

When inflation increases, jobs will be reduced and the economy will slow down. This will less the purchasing power of the most of people, which will also reduce the imports. Decrease in imports will end the dollar shortage and trade deficit will also be reduced. With the low purchasing power of the people, the government will also be able to reduce the budget deficit and save money for development works. But it is unlikely that the Imran Government will be able to achieve the tax collection target by increasing inflation, as the previous governments have failed to increase revenue in this way.

Economists believe that the next two years are difficult and challenging for Pakistan's economy. If the Pakistan Government is successful in improving the economy of the country following the path shown by the IMF, then it is OK, otherwise once again the Pakistan Government will have to ask for a loan from the IMF. That is fine, but due to inflation, the situation of the people of Pakistan will be so worse, then it will not in their control to recover from.

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