Horrendous impact of IMF loan program on middle-class

Pakistan managed to revive the loan program of the International Monetary Fund (IMF) under the toughest conditions. The prices of electricity and fuel will further increase in the coming days in the name of the levy hike.

The federal government surrendered before the IMF by accepting the toughest conditions to get another tranche of loan including a reduction in gas subsidy and the exchange rate of the US dollar.

Finally, the IMF Executive Board revived the loan program and approved another tranche of $1.17 billion for Pakistan.

In Washington, the IMF Executive Board approved Pakistan’s staff-level agreement and restored the loan program. The global financial institution will transfer the new tranche worth $1.17 billion this week under the program’s seventh and eighth reviews.

Finance Minister Miftah Ismail said in Twitter messages, “Alhamdolillah the IMF Board has approved the revival of our EFF program. We should now be getting the 7th & 8th tranche of $1.17 billion. I want to thank Prime Minister Shehbaz Sharif for taking so many tough decisions and saving Pakistan from default. I congratulate the nation.”

Alhamdolillah the IMF Board has approved the revival of our EFF program. We should now be getting the 7th & 8th tranche of $1.17 billion. I want to thank the Prime Minister @CMShehbaz for taking so many tough decisions and saving Pakistan from default. I congratulate the nation.

— Miftah Ismail (@MiftahIsmail) August 29, 2022

“Thank you Mian @NawazSharifMNS and PM @CMShehbaz for reposing your trust in me by appointing me the finance minister twice. InshaAllah I will continue to endeavour to never let you or our country down.”

Thank you Mian @NawazSharifMNS and PM @CMShehbaz for reposing your trust in me by appointing me the finance minister twice. InshaAllah I will continue to endeavour to never let you or our country down. https://t.co/Uv76LjB6DV

— Miftah Ismail (@MiftahIsmail) August 29, 2022

The finance minister further said, “I want to thank China, Saudi Arabia, Qatar & UAE for helping us fulfil the financing gap that revived our IMF program. I want to thank IMF, World Bank, ADB, AIIB & IDB for their support for Pakistan. Thanks also to US, UK, EU, Turkey, Japan, Korea and others for the support.”

I want to thank China, Saudi Arabia, Qatar & UAE for helping us fulfil the financing gap that revived our IMF program.

I want to thank IMF, World Bank, ADB, AIIB & IDB for their support for Pakistan.

Thanks also to US, UK, EU, Turkey, Japan, Korea and others for the support.

— Miftah Ismail (@MiftahIsmail) August 29, 2022

PM Shehbaz Sharif said, “The formal resumption of an IMF program is a major step forward in our efforts to put Pakistan’s economy back on track. It is outcome of an excellent team effort. I commend Finance Minister Miftah Ismail & his team and other stakeholders for their hard work.”

The formal resumption of an IMF program is a major step forward in our efforts to put Pakistan’s economy back on track. It is outcome of an excellent team effort. I commend Finance Minister Miftah Ismail & his team and other stakeholders for their hard work.

— Shehbaz Sharif (@CMShehbaz) August 29, 2022

Impacts on middle-class

The agreement with the IMF is good news for the country’s economy and government, but for the people, this agreement and its implementation is no less than a nightmare because Pakistan has to fulfil the toughest conditions of the IMF. The government has already hiked the basic electricity tariff by more than Rs7 in July and August, and now the power generation losses are also being charged from the nationals in the name of fuel price adjustment.

The IMF has been assured that the levy on petroleum products will be increased and the levy on petrol will be raised to Rs50 per litre. The government will collect an additional Rs855 billion from the petroleum levy, so the people will not be able to get relief from the reduction in oil prices in the global market.

The federal government will also increase the gas rates in a phased manner and the gas subsidy will be limited, increasing the gas rates will also cause problems for the people.

Economists say that the IMF’s loan program will reward Pakistan’s rich and poor, but it will make life miserable for Pakistan’s middle-class. The amount of tax concessions and exemptions in Pakistan is more than Rs1,400 billion and the privileged and powerful class in the country will not face any difficulty from the IMF’s conditions. The government gave exemptions to the poor class but the difficulties for the middle-class will be increased in the coming day.