IMF Loans at the Expense of the Commercial Sector 2023

Former President of the Islamabad Chamber of Commerce and Industry and President of the Citizens Developers Association

The depreciation of the rupee has increased the financial load of Pakistanis, whose total debts now surpass $100 billion. The business community has exerted consistent pressure on successive administrations to implement structural changes in order to cut expenses and wasteful expenditures. All state-owned firms should have been privatized a long time ago since they are losing money and have enormous obligations that would burden any new buyer. Why, despite global recessions and natural calamities, are more than 170 nations able to handle their affairs without assistance from the IMF, but Pakistan cannot? A country with the fifth-largest mineral reserves, the fifth-largest mango output, rice and cotton production in the top ten, a coastline with the finest beaches, and the ability to construct the finest waterfront real estate.

As opposed to being viewed as a sort of relief, these loans have placed a heavier burden on the present and future generations of Pakistan. Continuous increases in tariffs, the Goods and Services Tax (GST), new taxes on real estate and retail, increasing import levies, and growing food prices have transformed the population of Pakistan into survivors and will compel companies to go abroad. Unofficially, it has been estimated that inflation has surpassed fifty percent; this figure is frightening when contrasted to the United Kingdom, which is experiencing inflation of just eleven percent, and Switzerland, where inflation has only reached three point three percent. The rising expense of living and conducting business in Pakistan has become the major cause of the brain drain issues we are currently experiencing. In addition, Pakistan will continue to experience budget deficits year after year until FBR expands the tax net. The tax system has previously been identified as one of the most complicated in the world, requiring urgent reform. FBR has been attempting to analyze the real estate sector, which is already burdened with taxes such as advance capital gains tax, stamp duty, advance income tax, tax on property retention, tax on deemed income, cvt foreign assets, property tax, and tax on rental income, among others. FBR must avoid any additional increase in taxes on both major and small-scale industries, as well as all sectors that contribute to the economy; if the cost of doing business continues to climb, companies will be forced to migrate to the Middle East or the West. This is primarily due to the high cost of lending, increased tariffs, fuel prices, labor costs, and the high cost of raw materials as a result of increased duties, import taxes, and a ban on imports in general. In order for the country to meet its expenditures, the tax-to-GDP ratio must rise above 9 percent. The government’s decision to raise the GST is also a temporary solution; thus, the undocumented economy of Pakistan’s marketplaces must be brought within the tax net so that the whole tax burden does not fall on the shoulders of regular taxpayer and businessmen across the nation.

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About the Author: Sanjh Vishwakarma

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