It has been made sure by different investor services that the time is close when the entire Pakistani system will default without an IMF bailout. Pakistan is still having different financial disturbances in the past years and if this kind of situation occurs then nothing will be going to support it. This information has been taken from a reliable platform and hence no chance of scam.
As time passes, the financial options for Pakistan are becoming limited and without an IMF bailout, everything will be disturbed. This was not a big issue a certain time ago but when the recent pandemic occurred, Pakistan fell into a deep well and now the only support is the International Monetary Fund.
As the external debt repayments in Pakistan are increasing to an extent level this is why the foreign exchange reserves of Pakistan have been declining. If this issue is not addressed at the fixed time then it will cause balance to payment crises. It has made clear on Tuesday that beyond June, there is a great chance of Pakistan defaulting.
Pakistan Government Response
After getting these types of warnings, the government of Pakistan moved ahead with a new loan program with the IMF that will contribute to stabilizing the economy of Pakistan and will provide financial assistance to it. Pakistan and the IMF have been negotiating for a long time on certain issues including energy sector subsidies and tax reforms etc.
Here, the most important thing that all of us must clear is that it’s not like that if the resources have warned Pakistan about upcoming challenges then the default is forthcoming. It has been declared by Pakistan officials that in the absence of the IMF, they can balance all the debt obligations of the country.
But still, no one knows the future and how will be the situation of Pakistan in the coming months and whether its economy will survive or not. To overcome this emerging issue several measures are taken by the government of Pakistan to ensure an IMF bailout. Additional taxes are imposed and energy tariffs are increased.
How Pakistan Can Avoid Defaulting?
There is no doubt that every segment of Pakistan’s society has to face the consequences of default without the IMF bailouts. Especially those communities will be affected badly due to this default who depend upon the government a lot and have low-income sources. Therefore to address the economic challenges it has become important for Pakistan to consider the given mentioned steps:
- Firstly, it’s important to secure a new lawn program with the IMF. reaching an agreement on a new lawn program will surely contribute to balancing the economy of the country and avoiding default.
- This issue can be resolved somehow by increasing exports by keeping industries like agriculture, textile, and IT in focus. Moreover, incentives should be offered by the government to exporters so that they can be encouraged to expand their operations widely.
- When increasing exports helps a lot then the reduction in imports will also contribute to making the financial condition of Pakistan better. The government can implement such kinds of policies that will make the businesses disagree about importing things from foreign.
- If we compare the tax reforms of Pakistan with other countries then we will come to know that our country is having a very low tax-to-GDP ratio as compared to other countries. Therefore, to increase the revenue, tax reforms should be implemented.
- By addressing the energy sector issues, we can take a step to avoid the default of Pakistan. As this sector is becoming a cause of stress for the government hence should be handled.
The financial condition of Pakistan is somehow under control because of the IMF bailout but due to its absence, a default of Pakistan is expected. It has been declared by different sources that beyond June, because of the absence of the IMF, there is a chance of Pakistan default.