Pakistan claims IMF conditions are too harsh. ILLUSTRATION: JAMAL KHURSHID
Reasons for the refusal were attributed to the harsh nature of the conditions proposed by IMF.
Earlier on Friday, the government had paid $260 million to the International Monetary Fund (IMF) as a part of loan repayment.
On Thursday, Finance Minister Ishaq Dar rejected IMF’s demand to levy new taxes worth Rs275 billion as a pre-condition for new program.
The draft containing details of the conditions that IMF asked Pakistan to impose will be given to the finance officials on Sunday.
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@Xnain: @I MF: Now both parties GoP and IMF are happy, they both achieved objectives, i.e. to obtain loan and to give loan. It was the main purpose, remaining all formalities. It was a nerve game wherein both succeeded. And I am sure that next time IMF will again come and offer loan to repay the old ones. They are just interested in that 3% i.e. Interest.
@I MF: Who is going to default, Sir, its a game of nerve, let's see who will win, or they will set in the middle and both will claim that we gave/receive loan on our conditions. This will be win win position for both parties to announce for the media.
@Xnain: @sgrr:
Do you people have any idea what the consequences of a sovereign debt default are? It will be next to impossible to get a loan from any multi-lateral lending agency for the next decade or more and even then it will only be at much higher interest rates.
That's telling them ! Wait and watch for the IMF to come begging to Pakistan to forgive them and please accept the loan with no preconditions at all !!
"Fortunately, I have an opportunity to deal with these IMF people who (not in Pakistan)came to us three or four times in a year to discuss the economy and asked stupid questions" Okey, I got the trolling....
@ Anusha Naqvi
You are spot on! We all stand by PMLN to steer us out of the crisis.
please dont ask IMF. just ask for some soft loan from India.India has already given Billion dollar loan to bangladesh,burma and srilanka..............
We should tell the IMF this:
"If you don't give the loans immediately and without conditions, the people of Pakistan will get radicalized !"
IMF will quake in their shoes and part with their billions in a nano-second.
@Anusha Naqvi: This is their naivety.
Only the far-sighted government of PMLN can dare withstand all pressures. The whole nation has stood behind tireless & visionary leadership of PMLN to steer the country out of crisis.
@Xnain: Fortunately, I have an opportunity to deal with these IMF people who (not in Pakistan)came to us three or four times in a year to discuss the economy and asked stupid questions, as all this information is available on website and we repeat the same they agree and go back and after three or four months again come, the same exercise repeated and so on. I my self and my colleagues understand that they are just coming to excursion tours.
Lets see what will happen in Pakistan. As they are bankers and banker will never want to mark to mark any of loans bad/classified. This is the nerve game and it seems that the IMF is loosing its nerves otherwise these 'sood khor' never come to Pakistan at this point of time.
@sgrr: Just because "IMF wants to keep their books clean" is not the whole story. The reason for IMF coming to Islamabad is because of the political will. PPP could also force IMF to do the same, but they didn't. IMF doesn't want to see Pakistan default is not because it considers Pakistan critical to global trade system but because its the mandate of IMF to help out its member countries (Which includes Pakistan as well) in the time of need and to keep global trade settlement system as smooth as possible. IMF wont beg the government to accept its assistance, neither will it provide free lunch to GoP.
On some points PML-N government is going towards the most exact directions and taking the solid steps on war bases to overcome the energy crises and to not to get the loans from IMF on IMF's terms and conditions are the two major exact directions.... Much the best,excellent and august step you took PML-N.Keep it up and get Pakistan and Pakistan's nation rid of IMF's and US' aid's cages so that Pakistan could stand on its own feet to get real and uninterrupted sovereignty.......
@Ali Hassan Bokhari: Dear Bokhari, the law is well known as it has been reduced from the higher one in recent past. The actual problem is the vluation of the plot/property, on which tax needs to be collected and require developing of a system where the assessing agency can assessed the proper value and is a gigantic task, I do agree but one has to take the step in right direction. The treasure is hidden there. As you know that in any of the DHA in any part of the country, the minimum value of a 1 kanal plot is not less than 15 to 20 million, resulting a tax of 150K to 200K per annum, not to talk about the constructed house. The task is difficult by may be achieved if there is a 'WILL'.
@Xnain: Dear Sir, IMF always wanted to keep its books clean so it cannot afford to have in its books a country who has defaulted in repayment to IMF. One of the signal if you can think is that last time when PPP went to the IMF, the Pak tean went to Dubai as IMF people declined to come to Pakistan due to bad law and order here in Pakistan. But now when feeling that Pakistan this time is not coming to them the IMF people came here to Pakistan themselves. Do you think that law and order in Pakistan is now comparatively better. 2nd when Pakistan declined to accept offerred conditions, IMF should go back immediately but why they are wondering here and there in Pakistan. Use your brain Sir.
@Straighttalker:
"economic progress during the Musharraf era, shamelessly omitting his name, in the following words:..... The country’s real GDP increased from $60 billion to $170 billion, with per capita income rising from under $500 to over $1000 during 2000-07"
Just think. Increasing the GDP by a factor of three in six years ($60B to $170B) means an average annual growth rate of nearly 20%!! Even China or any other significant country achieve growth anywhere near that. So, how did Musharrf do it? It is called cooking the books and using smoke and mirrors. There was an article here on ET about the false GDP numbers cooked up by Musharraf and Shaukat Aziz.
Yes we can.We will have to ammend Finance Bill 2013-2014 by Not giving 15% Increase on Defence Spending, No new increase of 10% for all Pakistan Government employee, No military pension allocation from civilian budget, GST back to 15%, Impose Ag-Tax, Increase Railway fare, provide mobility to common Pakistani in urban areas. Banned unions and political parties calling for General Strike to Shut Business, Cities,etc. Say No to IMF Now and Forever.
It is a lie. They accepting all the conditions. See energy policy and raise of price of diesel and petrol/
@SGRR: sorry to say your not updated with the laws of this country but every sale or purchase generates 3% of the government stipulated market value of a property and/or declared value of the property, whichever is higher as taxes to the government exchequer ...so adding another 1% would be insane, you know the numerical figure of such a percentage becomes in millions and the only thing they need to actually do is to stop the corruption by literally replacing the entire staff, every single one is rotten to the core some more so then others but all of them will charge you more then the government value when dealing with property why not first remove that and then expect another increase not an arbitrary increase without actually curbing the problem first.
@sgrr: The question you should be asking is that whether Pakistan is sufficiently critical for international trade or not. Pakistan's total trade volume is around 65 Billion USD. This roughly equals to around 0.18% of total trade. This is nothing against EU,USD and China which contribute around 12% ,10.6% and 10.58% respectively. So Pakistan is not a systemically important country for IMF thus her defaults matter little to IMF.
The name of the game is ......strategy. First, refuse the IMF thereby gaining ' brownie points ' from the people making it easier to impose additional taxes etc. Second, once these new taxes are in place then its easier to go to the IMF...................I just winging it, as I see it.
@Salem: IMF is not a political jagga party. Their main demand is the levy of Reformed GST or VAT to increase documentation. While IMF finances governments at subsidized rates, with the current credit rating of Pakistan the costs of borrowing will be astonishingly high. IMF is not the evil in itself. It forces the government to do things that it should i.e. increase tax revenues and reduce budget deficit to sustainable levels. The whole trading community, retail and wholesale sector remain out of taxation net. When IMF pushed Mushi for VAT, the whole tajir community united against its application because it would document their incomes (upon which they hardly pay a penny of tax). From Karachi to Khayber, the traders called for strikes and protests and the initiative fell apart. IMF again pushed PPP government for documentation of economy via RGST/VAT but this also received similar response. Even today, this community remains committed to not paying taxes. Before budget KCCI chairman made an interesting statement. He motivated the government to tax afghan transit trade and providing relief to common man by not introducing new taxes (escaping taxation again). And the community succeeded again when KPK government introduced a tax-free budget.
@Zaka: "Only Musharraf said goodbye to IMF for ever, for which he is now being punished.". Are you sure? The numbers dished out in Musharraf's era smacked of manipulation. One small fact to ponder - the growth rate was probably around 6-7 % (that too was suspect) in one year of all his rule from 1999-2007. Most of the years it was around 2-3 %. Yet as per Musharraf's statements, the economy doubled during his rule. Either he doesn't know his math or he expects everyone else to be studying in some madrassa.
This ungrateful nation must remember that Parvez Musharraf had paid off the high-interest rate IMF loans. One of the first acts of the PPP government was to apply for an IMF loan, prefacing its application with laudatory comments on economic progress during the Musharraf era, shamelessly omitting his name, in the following words: "Pakistan's economy witnessed a major economic transformation in the last decade. The country's real GDP increased from $60 billion to $170 billion, with per capita income rising from under $500 to over $1000 during 2000-07.....the volume of international trade increased from $20 billion to nearly $60 billion. The improved macroeconomic performance enabled Pakistan to re-enter the international capital markets in the mid-2000s. Large capital inflows financed the current account deficit and contributed to an increase in gross official reserves to $14.3 billion at end-June 2007. Buoyant output growth, low inflation, and the government's social policies contributed to a reduction in poverty and improvement in many social indicators". (see MEFP, November 20, 2008, Para 1).
Not surprisingly, the PMLN has started its regime by extending the begging bowl once again.
@meekal a ahmed:
We need 'committers'- people dedicted to serving Pakistan- not 'quitters'.
Has it ever happened in the world that the person who needs a load dictates the terms and conditions. You always accept the lenders demands.
"ET" Biased towards PML-N
ET where are my comments?????
Only Musharraf said goodbye to IMF for ever, for which he is now being punished. I do not pin any hope in this government as it is evident from their pro rich budget. It is the IMF who has refused to the rulers, not the rulers.
For the last 3 decades, IMF never tried to pressurize any country to levy tax upon the rich and the land owners, what they always did was 'increase electricity charges, increase sales tax, take away all subsidies the government gives to the poor' and so on and so forth. Why our readers cannot understand that IMF is nothing but a bunch of Jewish baniyas who are very happy to see the 'Nangey Bhookey Awam' of the so called third world countries. IMF will never ask our government to put taxes on the land lords and agricultural tycoons.
@Rameez:
You might be willing to eat grass but I'm not.
This is a typical tribune story of the brave government fighting the IMF for the poor people of Pakistan.
Reality is that PMLN have not bothered to expand the tax base at all and have only taxed the poor to protect their own skin.
Forget the IMF. Let's go to China instead. What! China has 3.81% stake in IMF and India 2.34%?!!!
Drama, i can bet
How are they going to raise 3.5 trillion which they budgeted. almost 1.5 trillion deficit. Just to show the nation that they didnot bow to IMF and after some days they are going to make a deal with IMF claiming that the terms are now good for the nation.
@Polpot:
As as are you........(get a life)
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It seems no one knows what went on in the discussions. We will have to wait for a few leaks!
I would imagine the IMF would ask, at the outset, to re-enact the VAT/RGST. Pakistan helped themselves to a lot of IMF money and did not implement what was the anchor of the 2008 SBA. Not only that, we even got an augmentation in IMF money on the basis of the same promise/commitment.
Ask Dr Ehtisham Ahmad who was Advisor to Hafeez Sheikh on the VAT. He quit that job and quit his IMF position as well. It was bold of him. If we had more people like him with integrity and principles, we would be a great country.
So, when IMF ask for an increase collection targets then it is a bad idea because they are asking for indirect taxes? Well, think again. PML N is trying to be a champion of poor masses but in reality the leaders of past and present are all incapable. Let me reiterate, the beaurocracy is in fact incapable, Inefficient, lazy and lacks any vision.
I dont understand why cant the govrernment establish large companies and offer their shares (denominated inUS$) to overseas pakistanis. If this is applied then Pakistan will received atleast 40-50 billion dollars and then no need to go to IMF or world bank.
And everyone mean to say,then they lived happily ever after!
@sgrr:
Yea, rite.!!!!!!
This kind of gamesmanship can be dangerous. Pakistan needs the funds and IMF needs repayment of past debts. It is Pakistan that is financially at the edge of the precipice, it needs to find a way through the logjam. Default is not an option because in its current fragile condition any additional load can prove calamitous. Give and take is a necessity.
Time to eat grass for nuclear power nation......what they are already on grass.......
ET where are my comments?????
It's never too late sometimes, a good step taken by the finance minister , for the very first time.Such initiative has proved that still Pakistan does posses prudent leadership.
how did mr saleem come to know that IMF was demanding to impose tax on real estate and agriculture and not on common man? did IMF send a personal message to him?? this nation is so sick!!!!! no matter what the govt does it will never go down well with ppl
ET didn't mention what were the conditions proposed by IMF.
Did they include tax on agriculture?
blimey .. additional 275bn of taxes? on top of the increase of around Rs.500bn of taxes announced in budget 2013-14?? has IMF gone mad ?
The fact is what IMFit seems has been conveying to Pakistan officials is that the Tax collection figures of Rs 2007 billion (projected) for this year are faulty and are contrary to the facts and they should be re-visited.Actual tax collection at most will be Rs 1970 Billion .The basis for tax collection target for next year is not correct and needs to be re-visited.
Yes, income from all sources of income should be taxed including agriculture.
The talks will and should continue. We trust our new government
Its not a surprise to know that Pakistan has declined to accept 'offerred conditions';. The million dollar question is whether IMF is ready to accept the default by Pakistan, certainly not, they have to run the system, therefore they will come with new conditions which might be acceptable to Pakitan. As regards the imposition of new taxes, there is sufficient space avalable in this regard in our economy if the Government wants to do it. Only one avaenue which I propose can earn more than the amount IMF has proposed i.e. Property Tax without any discrimination. If the Government levy a tax on the plots/houses above the area size of 10 marlah, i.e. around 250 square yards in muncipal area and if it is outside the muncipal area it should be on covere area exceeding 10 marlah. The tax should be 1% of the current market value of the plot/house on annual basis. Through this way only from Islamabad, government can get this amount and from the middle class but only from the class having resources to pay taxes. The only thing which require is the 'WILL', which is missing altogether.
"Discussions regarding a new loan between the government and IMF have failed." +++++++++++++++++++++++++++++++++++ IMF is nervous and confused now.
Demand to levy taxes on agriculture, tax collection from industrialist, tax collection from tax thieves is harsh conditions .. Unacceptable for pakistan govt to tax rich .. Taxing salary earning middle class through income tax or gst is only acceptable for govt ...
no new loan !! say no to IMF , no matter what kind of conditions they are gonna impose !
Thank God!!!!!!!!