If Pakistan does not want to go to the International Monetary Fund IMF again, what will it have to do?

International Monetary Fund (IMF)

Inflation and economic problems are currently a global problem, and fears of a recession are being expressed even in the world's largest economy, the United States.

Pakistan is also trapped in an economic vortex for the past several months. Caught between the depreciating rupee, rising energy prices and the highest inflation rate in recent history, the people are facing dire straits right now.

A few days ago when we asked for your questions on the current economic situation, one of the most asked questions was whether Pakistan is going bankrupt and is there any improvement in the economic situation.

Many people have asked this question whether we will be able to reach a better place in the next five years or will we remain stuck in the same cycle. We have tried to know the answers to these questions by talking to some experts.

What is the reason for the decline in the value of the dollar in the last few days?

Let's start with the dollar, which after touching an all-time high of Rs 240 on July 28, is now decelerating to a low of Rs 213.

Economic analyst and journalist Khurram Hussain says that the declining trend in the value of the dollar since July is due to repatriation of money by Pakistani exporters and declining exports.

Talking to The Time News Today, he said that according to the business circles he has been in touch with, the exporters were waiting to bring back the dollars they had earned abroad to Pakistan.

"When the value of the dollar reached its highest level, they brought money back to Pakistan, which reduced the pressure on the currency market."

It should be noted that according to the rules of the State Bank of Pakistan, the exporters are obliged to bring their export earnings back to Pakistan within 120 days.

Earlier this limit was 180 days but now 120 days means that exporters are allowed to keep their money out for only that many days.

Also, according to Khurram Hussain, oil imports remained very low in July as some reports suggested that consumption decreased somewhat following the rise in petroleum product prices, which oil companies have ample reserves of.

Apart from this, due to strict import restrictions by the government, the demand for dollars has also decreased.

All this has reduced the pressure on the economy to some extent, but experts say that the situation is still not completely satisfactory.

Is the risk of bankruptcy averted?

Uzair Younis, director of the Pakistan Initiative at the Atlantic Council think tank in America, says that the situation has improved, but Pakistan is still not completely out of danger.

In a conversation with the BBC, he said that Pakistan's chances of receiving installments from the International Monetary Fund (IMF) are bright now, but Pakistan will still need additional funds for its financial payments.

It should be noted that according to the State Bank, Pakistan needed about 33 billion dollars this year, which it has managed, but experts say that things like reduction in imports and the installment of the IMF are not so sustainable. To support the economy permanently.

Khurram Hussain also agreed with him saying that we have definitely moved towards a safe place but still not completely safe, especially at a time when one of the largest buyers of Pakistani goods is from one of the largest countries. There are risks of recession in America while the situation of European economies is not very encouraging.

He says that the government has few options at the moment as industries will ask for subsidies to increase their production, which the government is unable to provide due to financial constraints and IMF agreements, while high interest rates and gas shortages. Due to this, there are difficulties for business.

Political situation and foreign aid

Pakistan has sought assistance from the IMF several times in the last 75 years and there have been times when the program has stalled due to non-fulfilment of the IMF's conditions.

The same thing happened this year and as a result the complete restoration of the program has not been done yet, but there has definitely been progress towards restoration.

Uzair Younis says that the IMF is tired of Pakistan's violation of conditions, which are also politically motivated. It should be noted that the federal government had announced the imposition of fixed sales tax on traders this year, but later the traders This decision was withdrawn on protest.

Uzair Younis says that now that the general elections are around the corner in Pakistan, it will become a political compulsion to break the terms of the tough agreement with the IMF, so it is possible that we will have a similar financial crisis next year. Face the situation.

He said that no matter which country we get aid money from, unless the tax system in the country is correct, the economy outside the tax sphere will soon bring us back to the same point.

What is the solution to all this?

Experts have been stressing more and more that Pakistan needs drastic reforms in its economic structure if it wants to avoid going back to the IMF.

Any country has three main ways of earning foreign exchange which are exports, remittances and foreign investment.

If these basic pillars of an economy are not strong and it is highly dependent on imports, then there is bound to be a shortage of foreign exchange and a fiscal deficit in the country.

Uzair Yunus says that the IMF repeatedly takes from Pakistans has been asking to expand the scope but he can only do so to a certain extent as it is ultimately a 'political issue'.

He points to the government's move to remove taxes from businessmen, saying that such measures will continue to cause problems, but if Pakistan really wants to stand on its own feet, it needs to take measures to boost its agricultural, retail, and real estate sectors. Taxes will have to be levied on the sectors but at the same time a favorable environment for business will also have to be created.

However, he reiterated that this is ultimately a political question as political parties have to lose some of their popularity with such actions.