Pakistan’s economic situation continues to worsen, despite receiving financial aid from friendly nations and the International Monetary Fund (IMF). The country is grappling with its worst economic crisis, leading to a series of harsh decisions by the Shahbaz Sharif government to comply with IMF’s strict bailout conditions. Among the drastic measures, 1.5 lakh people have been laid off in a single move, and more tax burdens are expected to follow. Here’s a closer look at what Pakistan is facing and why these steps were necessary.
IMF’s Tough Conditions Lead to Economic Strain
The IMF agreed to provide financial assistance to Pakistan, but with conditions that have worsened the everyday life of its citizens. Despite Pakistan’s efforts to seek help from international organizations like the World Bank and Asian Development Bank (ADB), it was the IMF that stepped in with a bailout package. However, the package came with strict conditions that the Pakistani government had no choice but to accept.
1.5 Lakh Jobs Lost Overnight
One of the most significant impacts of these new measures is the mass unemployment of around 1.5 lakh people in Pakistan. With inflation already making life difficult for many, this move has worsened the situation for countless families. Jobs across different sectors were slashed to meet the IMF’s demand for cutting administrative expenses. These drastic measures have been implemented to secure the next installment of the IMF’s bailout package, which includes a $1 billion disbursement as part of a larger $7 billion package.
Merging Ministries and Closing Departments
Alongside job cuts, the government has also locked six ministries and merged two others. This is part of a larger strategy to cut administrative costs and comply with the IMF’s conditions. While these steps might help Pakistan’s government manage its expenses in the short term, they have caused significant distress among the public, who are already struggling with high inflation and limited job opportunities.
New Taxes on Agriculture and Real Estate
To further meet IMF’s demands, Pakistan is preparing to raise its tax-to-GDP ratio by imposing higher taxes on the agriculture and real estate sectors. This step is likely to increase the financial burden on the public, especially as the country is already grappling with high inflation and limited purchasing power. The government has also indicated that it might reduce subsidies, further increasing the pressure on citizens.
Pakistan’s Finance Minister, Mohammad Aurangzeb, has stated that these changes are necessary to keep the economy on the right track. He emphasized that a relief package has been finalized with the IMF, which he claims will be the last such package for Pakistan.
Focus on Increasing Tax Revenue
The Finance Minister also highlighted the importance of boosting tax revenue. According to him, around 7,32,000 new taxpayers have registered in the country, bringing the total number of taxpayers to 3.2 million. As part of the government’s strategy, stricter actions will be taken against tax defaulters. Aurangzeb stressed that individuals who don’t pay their taxes will not be allowed to purchase property or cars, signaling a shift towards a more aggressive approach to tax collection.
Pakistan’s Economic Struggles Continue
Last year, Pakistan narrowly avoided default thanks to the IMF’s assistance at the last moment. However, despite the bailout, the situation remains challenging for the nation. The economy is still facing hurdles, and inflation has made it hard for everyday citizens to make ends meet.
With these new steps, the Pakistani government hopes to stabilize the economy, but at a significant cost to the public. As Pakistan moves forward with IMF’s bailout conditions, the common people are expected to feel the brunt of these decisions, from mass job cuts to new taxes. Only time will tell if these measures will bring the much-needed relief Pakistan is aiming for or if the burden on its citizens will continue to grow.
