How will the Repayment of the new IMF program loan be possible? Miftah Ismail's Analysis

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#pakistaneconomy #pakistan #imf #imfpakistan #pakistaneconomiccrisis #pakistandefault #aniqanisar #aitrazat   How will the Repayment of the new IMF program loan be possible? Miftah Ismail's Analysis

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00:00Good enough, Mr. Miftah, to say that the 24th IMF program will be the last for Pakistan.

00:05Are we taking the steps to avoid going to the IMF after this?

00:10No, no, the government is not reforming a single penny.

00:13Mr. Arun Jaib is a very good man, he works well, he is a sensible man.

00:16But the government is not doing anything from behind.

00:18Look, I will just adjust your views, it will be understood very easily.

00:24Pakistan has to return $25 billion every year.

00:28Pakistan's current account deficit is either negative or equal.

00:32Pakistan does not receive any money every year, there is no extra dollar.

00:35When we import and export, the export is less, so we do not receive any money from there.

00:41So we have to return this $25 billion, we take a loan from someone else.

00:45If you want to give a loan to Japan, then take it from China.

00:48If you want to return it to China, then take it from Saudi Arabia.

00:50If you want to return it to Saudi Arabia, then take it from the IMF, etc.

00:53Which we generally say in the language that we are turning hats, that we are giving from here to there.

00:57Essentially, this is Pakistan's way of financing.

01:00Now when you have your program with the IMF for the next three years,

01:04they have made a projection that you have to return.

01:07You will not have $25 billion in the fourth year.

01:10Obviously, you will have to give a loan from somewhere.

01:13Now to give a loan, either you have so much,

01:16if your import is $7 billion per month at that time,

01:20then you can take a loan from a private banker, not the IMF.

01:24But the thing is that there is no such thing here that you can increase your export, increase your revenue.

01:29So what can be done about such a thing, Mr. Mifta?

01:32That we at least have to give back the loan,

01:35either increase the remittances, increase the export, or reduce the import.

01:38Can anything be done with these things?

01:40What first step can Pakistan take on this side?

01:44Are we not taking another loan to get our loan back?

01:47There is no such thing that you have taken a loan from one shop,

01:50you take a loan from another shop and return it to the first shop.

01:53There is no such thing.

01:54So what should be the first step?

01:56Look, if you don't have $25 billion extra to give in the fourth year,

02:00then you will have to take a loan.

02:02You will have to take it from the IMF too, I can assure you.

02:05What should be done?

02:06Look, there is one thing, in economics it is called the twin deficit.

02:09The greater your fiscal loss, the greater your commercial loss.

02:15Absolutely.

02:16There are a lot of complicated reasons for that, I won't go into that.

02:19But the greater your fiscal loss, you will have to borrow money from outside,

02:23which is basically that you will have to import things.

02:26That means that if you want to reduce your commercial loss,

02:30then you will have to reduce your budget loss.

02:33This means that either reduce the expenses,

02:35which the government is not in any mood to do, or increase the tax.

02:38Now, when you have put 50% tax on business individuals

02:41and 40% tax on people who have a job,

02:44then there is not much room for tax.

02:46When you have put 18% sale tax on milk and pensioners,

02:50then there is no room for tax.

02:52If you put excise tax in one or two places,

02:54look, a mini-budget is also coming.

02:56So, they will put tax in one or two places,

02:58but you can see that this year too,

03:00they are almost 100 billion rupees behind in two months,

03:03and I think they will be 800-1000 billion rupees behind in a year.

03:07So, they will have to bring a mini-budget too.

03:09Therefore, you will have to reduce your expenses.

03:12To reduce the expenses, Mr. Mufti,

03:14I am sorry, I am cutting short.

03:15To reduce the expenses,

03:17Mr. Aurangzeb has made another announcement today,

03:19that 6 ministries are over, 2 ministries are closed.

03:21Please listen to that too.

03:25Out of the 6 ministries,

03:26one of them is Capital Authority CADD,

03:29which is being abolished.

03:30There are 2 ministries that are being merged.

03:32We have now brought the next 5 ministries forward.

03:35During this fiscal year,

03:36we will continue to take 5 ministries at a time,

03:38so that by the end of this fiscal year,

03:40we will be very clear

03:41that the federal government stands.

03:43Those that have to be closed, should be closed.

03:45And the institutions that we have to keep,

03:47we should re-engineer them.

03:49Mr. Mufti, closing the ministries,

03:52will this solve the problem?

03:55Is this the right way to have austerity measures?

03:59Look, the request is,

04:00one, to reduce the expenses,

04:02but number two, what I always say,

04:04and I repeat, keep repeating,

04:06that until you see the NRC award,

04:08and you don't leave a lot of money with Wafaaq,

04:11and you don't reject taxes,

04:13you will not end your fiscal crisis.

04:16Right now, if Wafaaq wants to spend 10 rupees,

04:19he has to tax people 25 rupees,

04:21and have to give 15 rupees to the provinces.

04:23When he taxes 25 rupees,

04:25people become poor,

04:26inflation increases here,

04:27they have to take loans,

04:28and the 10 rupees that he is spending,

04:30he is spending more.

04:32This is what Aurangzeb said,

04:33he closed one ministry, CADD,

04:35which should not have been needed,

04:36because he can run the government of Islamabad,

04:38Islamabad Metropolitan Corporation and CDA.

04:40And he is merging two ministries,

04:43he left the other three ministries.

04:45He is merging them,

04:46he is not removing anyone from them,

04:47meaning that the names of both the ministries will become one.

04:50You know, if you understand,

04:51commerce and industry,

04:52you will make it commerce and industry,

04:53that's it.

04:54He is not removing anyone,

04:56he is not downsizing anyone.

04:58But the thing is,

04:59do this too,

05:00do what you are doing,

05:01I am not doing it.

05:02But number one,

05:03until you don't reject the NRC award,

05:05you will not be able to reduce the expenses of Pakistan.

05:08You have to reduce the expenses of the entire government,

05:10if you reduce the 30 to 40 billion rupees of Wafaa,

05:13then it will be a big deal.

05:15I am telling you the truth.

05:16Where Wafaa is spending 18,800 billion rupees this year,

05:20we are not even talking about 40 billion rupees.

05:22So, let's keep this in perspective.

05:26Until you tell the provinces not to stand on their own feet,

05:31and tell them to collect their own taxes,

05:33until you don't make local governments effective in Pakistan,

05:37so that there is a good delivery of services,

05:39of schools and health,

05:40and the leakages there are cut,

05:42the corruption is reduced,

05:44until you don't reduce the PSTP,

05:46which you have kept 1150 billion rupees this year,

05:49until you don't bring 300 to 400 billion rupees,

05:52those 600 to 700 billion rupees should be reduced,

05:54fill for,

05:55people should not be fired from jobs,

05:57in such a tough environment of economics.

05:59But nevertheless,

06:00these are the things they need to do,

06:02they don't do it.

06:03No government of reforms,

06:05has made a commission for the NFC award,

06:07they are talking about the fact,

06:08they are not talking about agriculture tax.

06:09By the way, Mr. Mufti,

06:10politically,

06:11politically,

06:12it is possible to make reforms on the NFC awards,

06:14because this government is already,

06:16running on the backs of the unions.

06:18The Pakistan People's Party is upset,

06:19today,

06:20the MQM is threatening,

06:21that we will leave the government.

06:23So, in such a situation,

06:24it is possible to touch the NFC awards,

06:26and on the other hand,

06:27the matter of giving money to FATA,

06:29which was agreed upon at some time,

06:31every province had some responsibility,

06:33on that also,

06:34the political leaders are raising questions.

06:36The request is that,

06:37till here,

06:38your point is correct,

06:39that this government is standing on the backs of the unions.

06:42I will perhaps take an objection on this,

06:44that whose backs are they standing on,

06:46we know this too.

06:47We also know,

06:48whose backs are the unionists standing on.

06:50So, the chiefs are not on the backs of the unions,

06:52they are doing the same thing,

06:53they understand this,

06:54that Pakistan will not be good.

06:56See, if we don't do it today,

06:57after two years,

06:58we will do it in a worse state.

06:59After two years,

07:00we will not get rid of the IMF,

07:01if we don't fix the NFC.

07:03The IMF has also said this to you.

07:05We will not get rid of the IMF,

07:06if we don't reduce the population growth rate.

07:08All of them have said this to you.

07:10We will not get rid of the IMF,

07:11if we don't educate the children,

07:12and we can't do that,

07:13until we don't reform the local government.

07:15Until you don't finish the businesses of three people,

07:17in three provinces,

07:19and leave out one province,

07:21Banj-e-Sultan,

07:22until you don't finish these businesses,

07:24you won't disperse the power,

07:26you won't disperse the resources,

07:27you won't be able to move forward.

07:28Absolutely.

07:29If you want to do this,

07:30then keep doing it.

07:31And the people have rejected these rulers.

07:34Now, you are the one who is sitting here.

07:36Let's see how long this goes on.

07:37Right.

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