If The Pakistan does not want to go to the IMF again what will it have to do?
Inflation & economic problems are currently a World problem & fears of a recession are being expressed even in Global largest economy US United States of America.
The Pakistan is also trapped in an economic vortex for past several months. Caught between the depreciating Currency rupee rising energy prices & the highest inflation rate in recent history the people are facing dire straits right now.
A few days ago when we asked 4 your questions on currently economic situation 01 of the most asked questions was whether Pakistan is going bankrupt & is there any improvement in economic situation.
This question was also asked by many peoples whether we will-be able to reach a better place in the next 5 years or will we remain stuck in the same cycle.
We have tried to answer these questions by talking to some Economic experts.
What is the reason for the decline in value of the dollar $ in the last few days?
Lets start with the dollar which after touching an all-time high of Rs 240 on 28 July is now decelerating to a low of Rs 213.
Economic analyst & journalist Khurram Hussain says that the declining trend in value of the dollar since July is due to repatriation of money by Pakistani exporters & declining exports.
In a conversation with British News he said that according to the business circles he has been in touch with exporters were waiting to bring back the dollars they had earned abroad.
When the value of the dollar reached its highest level they brought money back to Pakistan which reduced the pressure on the currency market.
It should be noted that according to the rules of the State Bank of Pakistan the exporters are obliged to bring their export earnings back to Pakistan within 120 days.
Earlier this limit was 180 days but now 120 days means that exporters are allowed to keep their money out for only that many days.
Also according to Khurram Hussain oil imports remained very low in July as some reports suggested that consumption decreased somewhat following the rise in petroleum product prices which oil companies have ample reserves of.
Apart from this due to strict import restrictions by the government demand for dollars has also decreased.
All this has reduced pressure on the economy to some extent but experts say that the situation is still not completely satisfactory.
Is the risk of bankruptcy averted?
Mr Uzair Younis director of the Pakistan Initiative at the Atlantic Council think tank in America says that the situation has improved but Pakistan is still not completely out of danger.
In a conversation with the British news he said that Pakistan chances of receiving installments from the IMF International Monetary Fund are bright now but Pakistan will still need additional funds for its financial payments.
It should be noted that according to the Pakistan State Bank needed about 33 billion dollars this year which it has managed but experts say that things like reduction in imports and the installment of the IMF are not so sustainable. To support the economy permanently.
Khurram Hussain also agreed with him saying that we have definitely moved towards a safe place but still not completely safe especially at a time when 1of the largest buyers of Pakistani goods is from 1 of the largest countries. There are risks of recession in America while the situation of European economies is not very encouraging.
He says that the government has few options at the moment as industries will ask for subsidies to increase their production which the government is unable to provide due to financial constraints & IMF agreements, while high interest rates and gas shortages. Due to this there are difficulties for business.
Political situation & foreign aid
Pakistan has sought assistance from the International Money Fund IMF several times in the last 75 years & there have-been times when the program has stalled due to non fulfilment of the IMF conditions.
The same thing happened this year and as a result the complete restoration of program has not been done yet but there has definitely been progress towards restoration.
Uzair Younis says that the IMF is tired of Pakistan violations of conditions which are also politically motivated
What does the IMF finally want from Pakistan and how is the delay in the loan program affecting the country's economy?
Inflation in Pakistan is happening because of global World markets or because of government policies?
How long will inflation continue in Pakistan & is there a possibility of a reduction?
It should be noted that federal government had announced the imposition of fixed sales tax on traders this year but later this decision was withdrawn due to the protests of traders.
Mr Uzair Younis says that now that the general elections are around the corner in Pakistan it will become a political compulsion to break the terms of the tough agreement with the IMF so it is possible that we will have a similar financial crisis next year. Face the situation.
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He said that no matter which country we get aid money from unless the tax system in the country is correct the economy outside the tax sphere will soon bring us back to same point.
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