New Delhi, Jan 4 (NationPress) A recent report indicates that the IMF’s orthodox policies are likely to push Pakistan into a low-growth trap for an extended period. Without a significant reevaluation of the current approach and a genuine change in the superficial nature of the imposed fiscal austerity, the economy is expected to suffer long-term detriment, leaving ordinary Pakistanis in a state of unnecessary hardship.

According to author Sakib Sherani, writing for Dawn, since 2022, the current government has placed an overwhelming burden on the average citizen through stringent austerity measures under IMF supervision.

“A substantial fiscal adjustment has been achieved through extensive taxation and cuts in subsidies, with no indication of expenditure restraint from the government on itself or its supporters,” the report criticizes.

In stark contrast, government spending has surged to unprecedented levels, with discretionary expenditures ballooning as public funds are lavishly utilized for patronage and establishing loyalties to a new political framework.

This has shifted the entire burden of economic adjustment onto the backs of ordinary citizens and compliant businesses.

“Consequently, the nation is facing enduring economic ‘scarring,’ leading to business closures, rising unemployment, and almost half of the population now estimated to live below the poverty line,” Sherani notes.

For instance, a cumulative fiscal adjustment of 5.5 percent of GDP has occurred, marking the largest adjustment in Pakistan's history over a similar timeframe.

Much of this adjustment has stemmed from new tax initiatives. Since 2022-23, the government has enforced taxes and levies exceeding Pakistani rupee 50.4 trillion (including both federal and provincial taxes, as well as the petroleum levy).

“This figure is equivalent to the total tax collection over the 17 years preceding 2022. Following previous patterns of failure, this additional taxation has not resulted from broadening the tax base, but rather from further demands on existing taxpayers,” the report states.

The government’s ‘development’ spending, serving as a covert method for distributing taxpayer funds to ruling coalition politicians, has escalated from Rs 1.9 trillion in 2022-23 to a projected Rs 3.1 trillion by 2025-26.

“Expenditures on new fleets of vehicles, all-expenses-paid international trips for excessively large delegations, and extravagant spending on offices and official residences are all part of this trend,” the report highlights.

Additionally, the report suggests that either the IMF is complicit in this regime-supporting scheme or it has grossly neglected its responsibility towards the citizens of a member nation. In either case, accountability is necessary.

Regrettably, the IMF seems to be ignoring the government’s extravagant spending and reluctance to widen the tax base, the report concludes.