Amid the political instability and debt payments for power plants coming up under the China-Pakistan Economic Corridor (CPEC), IMF’s threat to delay the release of the USD 3 billion bailouts from six billion has pushed the Islamabad into an economic crisis.
Earlier, on June 12, Pakistan Finance Minister Miftah Ismail, who introduced the budget 2022-2023 to meet the IMF’s demand, admitted that IMF is still unhappy with the government over the budget because he did not implement Personal Income Tax (PIT) measures suggested by it, Islam Khabar reported.
This tax is yet another issue as few among the rich taxpayers in the economy have piloted it to their advantage, leaving the tax burden on the poor. It has compelled successive governments to borrow from outside. And this is the reason that Pakistan has asked for a loan from IMF for the 22nd time in the last six decades.
Recently, the Pakistani publication, Dawn hinted that Finance Minister may increase the gas, electricity and fuel bills starting next month. This will be the third hike in petroleum product prices.
As for the CPEC’s power projects, the IMF is seeking the proverbial “pound of flesh” from Pakistan, demanding that it will not allow it to use loan money for Islamabad to clear its over Pakistani rupees (PKR) 300 billion dues to China.
IMF’s suspicion has been grounded in China’s refusal to renegotiate the power projects under the CPEC for which Pakistan has also defaulted in payments. This came after Sharif approved the immediate release of PKR 50 billion to the Chinese independent power plant, the first instalment for the total outstanding dues of PKR 340 billion to ensure fuel supplies.
Eleven Chinese power companies have invested USD 10.2 billion to generate 5,320 megawatts, but nearly 2,000MW of power plants were shut last month due to the shortage of coal, Islam Khabar reported citing The News.
After demanding to impose domestic taxes and also deciding the fuel prices, IMF again came up with new order to know details of Pakistan’s dealings with China under the CPEC. Over this
former federal minister, Asad Umar said that they will not allow any external interference in CPEC.
“During PTI govt there was no compromise made in our commitments under CPEC. Now news reports are that IMF is demanding changes in CPEC contracts. Under no circumstances should we allow any external interference in CPEC. These decisions should be based solely on Pakistan’s national interest,” Umar said.
According to the Dawn editorial, the Pakistan government seems to have more or less acceded to all of the IMF’s major demands. The publication hoped that the lending agency will now be more forthcoming about the release of the much-needed funds.