Economist sees imminent default without IMF

Says govt cannot generate additional tax revenue in current testing times

Salman Siddiqui June 08, 2023


Leading economist Dr Kaiser Bengali has said that Pakistan’s economy is in recession and the default is imminent without International Monetary Fund’s (IMF) assistance.

“The government cannot generate additional tax revenue in these testing times. Instead, it has to cut expenditures in budget,” he said while responding to queries of the media at the Karachi Press Club on Wednesday.

He was of the view that there was hope among rulers till two weeks ago that the country would receive new foreign funding but that “has now vanished”.

“It seems the IMF is demanding some political concessions from Pakistan, that’s why the loan programme hangs in the balance.” Terming rupee devaluation an ongoing phenomenon, Bengali pointed out that a trader opened a Letter of Credit (LC) for import at Rs320/$ the other day compared to the exchange rate of Rs287/$ in the inter-bank market.

Speaking at a workshop titled “Budget Reporting” at the Karachi Press Club, Bengali called budget a political document instead of an economic document.

“Favourite sectors of the economy may continue to receive tax concessions, while others will pay the cost,” he anticipated.

The economist said that the number of rich people and big landlords was too small to generate the desired direct taxes, adding that there was no other option but to cut expenditures in the budget for FY24 to come out of the economic and financial crises.

“Defence budget will be in the queue to be revised downwards (to create fiscal space to support economic growth),” he remarked.

Published in The Express Tribune, June 8th, 2023.

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