Daily Times

The Shehbaz Sharif government has recently taken difficult and unpopular decisions in the name of reviving the economy, but they seem a futile service due to increasing political pressure. Instead of putting the house in order, the government is trying to restructure billions of dollars of loans taken from friendly countries.

The International Monetary Fund (IMF) has imposed a three-year debt rescheduling condition for Chinese loans. Finance Minister Muhammad Aurangzeb is on a three-day visit to China to address the most important task of rescheduling $15 billion in energy loans. It is expected that a Pakistan-China Working Group will be established for debt rescheduling. Pakistan also hopes to secure a $30 million panda bond from China, which will be discussed with the Chinese authorities. China’s energy circular debt volume is around five hundred billion rupees.

Pakistan is optimistic about debt rescheduling, but there are concerns from some critics. They argue that if China agrees to restructure the loans, other countries like Sri Lanka may also request Beijing to reschedule their loans, triggering a vicious cycle for China. Critics also believe Pakistan may face difficulties in implementing the structural reforms required by the IMF.

The finance minister is optimistic that the economic reform agenda will be strengthened through the IMF agreement. He recently had a virtual meeting with representatives of global rating agency Fitch, which acknowledged the improvement of Pakistan’s economic indicators.

The government has implemented a new retailer scheme in 42 cities to collect $50 billion. The retailer tax will be determined based on shop rent and investment. The minimum tax will be twelve hundred rupees per annum. A large number of traders have been excluded from the new scheme. However, there are questions about whether only a limited class of businessmen will be able to generate the targeted fifty billion rupees in taxes.

The government needs to understand that economy and politics are inseparable; both need stable conditions to thrive. While government’s efforts to revive the economy are commendable, the challenges are mounting mainly due to political storms. The government’s focus should remain on economic and political stability and growth, while addressing the concerns of critics and ensuring that the burden of taxes does not fall disproportionately on a small group of businessmen. *