In an attempt to get the IMF tranche of around US$1.2
billion released, the Government of Pakistan has imposed new taxes amounting to
PKR170 billion, increased electricity and get tariffs and withdrawn certain
subsidies. Added to this is persistent hike in interest rate as a measure to
curb inflation. Today, the State Bank of Pakistan is scheduled to announce another
hike of 200 bps on the recommendation of IMF. I am of the view that all these
measures will fuel the inflation already hovering around 30% and further erode the
competitiveness of Pakistani manufacturers and in no way help the country
overcome Balance of payment crisis. This will necessitate Pakistan to negotiate
yet another program with the lender of last resort on even more stringent
conditions. I seek comments from my LinkedIn friends.
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