PRINCIPLES OF TAXATION

The impact of IMF credit on

the economic growth of
Pakistan
Presented by: ALMAS SHARAFAT ALI & AIMA
ABIDI
01-112192-006 & 01-112192-002
BS(A&F) 4A

June, 16
2021
Submitted to: MA’AM AMAL KHAN
INTRODUCTION

 Pakistan and the need of funds

 Taxation system of Pakistan

 Loan from the IMF

 Usage of the loans

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BACK GROUND OF IMF

 Imf establishment i.e WWII ( in early

1940’s)
 Financial aid and advice to countries
 Member countries
 Foundation of monetary business
 Essential role in maintence of
international monetary system
 Flourishment of economic trade

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CONDITIONS FOR PROVIDIND
LOANS

 Reducing corruption and bureaucray

 Higher the amount of taxes and lower
spending
 Allow failing firms to go bankrupt
 Structural adjustments
 Privatization
 Deregulation
 Reducing corruption and bureaucracy

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PAKISTAN AND
IMF BAILOUT
 Need for the funds

 Thirteen IMF bailout

 Bailout package of $6 billion dollars to

Pakistan

 39 months spam & quarterly survey

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DETAILS OF THE BAILOUT

 Pakistani people objection

 Pakistan will pay $37.359 billion inside this bailout

package

 Tax expansion in the country(3.94 trillion PKR to 5.5

trillion PKR)

 Devaluation of Pakistani currency (since dec 2017)

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PAKISTAN’S ECONOMY AFTER COVID-19

 Pakistan’s GDP shrank by nearly USD $18

billion and per capita income fell by USD $100
in Fiscal Year 2019-20
 Interest rates that had been raised as part of the
IMF package were reduced by 5.25 percent
 COVID-19 further pushed the masses below the
poverty line as millions face fears of job loss
 Ehsaas Emergency Cash program

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PAKISTAN’S BUDGET
AND FUTURE
ECONOMIC OUTLOOK

IMF’s projections,
 Pakistan’s economy could experience a
negative GDP growth rate of 1.5 percent in
Fiscal Year 2020.
 Unemployment is also expected to rapidly
increase with projections of 6.65 million
people becoming unemployed in this fiscal
year
 Migrants who lost their jobs
 Prime Minister Imran Khan has been
successful in getting debt relief of around
USD $2 billion.
 Growing unemployment, high inflation, and
lower remittances

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IMPACT OF IMF IN LONG RUN
AND SHORT RUN

The severe austerity measures such as

 Heavy taxation,
 Rupee devaluation, and reduced
government expenditure
 The IMF program have helped reduce
Pakistan's current account and fiscal
deficit
 But at a heavy cost of diminished
economic growth.

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RESULTS &
RECOMMENDATIONS
What are the issues faced by the Pakistani economy in the tax system?
RESULTS
 The conclusion of this research is that IMF has failed to
do its job.
 IMF is working for the developed countries and its aim
of helping poor developing countries is only left in the
books.
 The empirical results show that the relation between
IMF loans and GDP is negative. If we want to increase
GDP Per Capita we must decrease IMF loans.
 Pakistan is sinking in debt and we are on the stage
where we take loans to give back loans and their
interest payments.
RECOMMENDATION
 Pakistan has to focus on our own policies
 We should focus on over own agriculture and industrial
sector because we can only finance our budget deficit if
we increase our productions.
 we should invest in the human capital
 We should develop our industrial sector which provide
high employment
 Stopping the corruption is a main step toward
economic growth
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THANK
YOU!

Email
Almassharafatali@gmail.com