IMF prescription

THE federal budget is traditionally announced in May to allow ample time for parliamentary scrutiny of the proposals but this year it is going to be presented in the National Assembly in the first week of June and the delay is ostensibly caused by the consultative process of the International Monetary Fund (IMF). The IMF has reportedly asked Pakistan to continue the path of fiscal consolidation by broadening the tax base, improving tax administration, enhancing spending efficiency and complying with public financial management at both federal and provincial levels in the upcoming budget. On the face of it, the IMF advice should help the country realize its stated goals of fiscal consolidation and growth but terms like broadening the tax base and improving the tax administration have become a nightmare for people of Pakistan. It is because, despite repeated commitments, the authorities concerned miserably failed to bring real tax dodgers into the tax net and the burden of additional taxation always fell on the common man. Every year, lofty schemes are launched to tax untaxed sectors and individuals but almost always these are withdrawn under pressure of the strong groups and lobbies and as a result the tax collection target is met by burdening the ordinary citizen. What a shame that under pressure from the IMF, the successive governments devalued currency massively on the false premise of promoting exports, which, instead fell sharply and devaluation served no other purpose than to hike inflation and make Pakistan a dumping ground of foreign goods. Despite all this, the Government has committed with the IMF to continue with the policy of so-called exchange rate flexibility. Similarly, structural reforms including in the energy sector and state-owned institutions only led to unemployment and an increase in electricity and gas tariffs whereas key challenges of mismanagement, corruption, favourtism, theft, line losses, efficiency and outdated infrastructure remain there