ISLAMABAD: As rising food prices are propelling inflation in Pakistan with the advent of Ramazan, Finance Minister Muhammad Aurangzeb on Monday said Islamabad will soon start talks with the IMF (International Monetary Fund) to ensure the release of $1.1 billion – the amount remaining under the current Stand-By Arrangement (SBA) which will expire on March 31.
At the same time, Aurangzeb declared that the entering into another deal with the IMF was essential for Pakistan’s economy and they would try to negotiate another package which would longer and bigger.
The current nine-month deal was interim in nature and he talked about another three-year period under the IMF assistance, saying the next year would painful.
It means Pakistan will follow the IMF dictate like raising energy tariffs which are going to further fuel inflation – a vicious cycle with no end in the sight.
And the inability curb inflation will also mean that there won’t be interest rate cuts, thus no relief in cost of doing business. In simple words, no new businesses and job opportunities.
Meanwhile, the anxiousness to please the IMF to get the required finances while meeting all the conditions is very well illustrated by a latest example.
Egypt last week not only went for a massive currency devaluation but also rate hikes, a combination that is worsening the cost of living crisis for millions of Egyptians.
As Islamabad is neither able to expand the tax base nor cut non-development expenditure for reducing budget deficit, another IMF deal will certainly a painful event for 240 million Pakistanis.
Without arresting inflation and deciding in favour of rate cuts, the IMF conditions will keep prices moving upwards.
