IMF Urges Pakistan for Urgent Economic Reforms
The International Monetary Fund (IMF) has highlighted the urgent need for policy reforms in Pakistan, noting that the country has fallen behind its regional peers in terms of living standards. According to a report, Pakistan has lagged in income per capita, competitiveness, and export performance over recent decades. From 2000 to 2022, the GDP per capita grew at an average annual rate of just 1.9%.
After reviewing a decade of its programs in Pakistan, the IMF acknowledged persistent challenges and recommended a greater sense of ownership. The IMF assessed Pakistan’s performance over the past decade, during which the country used three upper credit tranche arrangements and one Rapid Financing Instrument amid challenging conditions like the COVID-19 pandemic and floods. Initial progress was made, but it was not sustainable, leading to renewed imbalances.
Pakistan plans to impose a 5% excise duty on fertilizers and pesticides in the 2025-26 budget and amend the Civil Servants Act by February 2025 to enhance the anti-corruption framework. The government aims for net-zero circular debt flow in FY25 through timely tariff increases and targeted reforms.
The IMF report stresses that Pakistan’s ability to repay its debts depends on successful reform implementation and timely external financing. The recommendations highlight the need for structural reforms to address underlying economic issues. The upcoming measures will be crucial for Pakistan’s economic future, relying on the government’s commitment to enforce these reforms effectively.
Doubts Revealed
IMF -: The International Monetary Fund (IMF) is an organization that helps countries manage their economies by providing financial advice and support. It is like a big bank for countries, helping them when they have money problems.
Economic Reforms -: Economic reforms are changes made to improve a country’s economy. These changes can include new laws or policies to make businesses work better and help people have better jobs and living conditions.
GDP per capita -: GDP per capita is a way to measure how much money a country makes for each person living there. It helps us understand how rich or poor a country is compared to others.
Excise duty -: An excise duty is a special tax that the government charges on certain products, like fertilizers. This tax is added to the price of the product, making it more expensive.
Civil Servants Act -: The Civil Servants Act is a law that governs the rules and responsibilities of government employees in Pakistan. Changing this law can help improve how the government works and reduce corruption.
Anti-corruption -: Anti-corruption means taking actions to stop dishonest or illegal activities, especially by people in power. It helps ensure that everyone follows the rules and that resources are used fairly.
External financing -: External financing is when a country gets money from other countries or international organizations to help with its financial needs. This can be in the form of loans or investments.
