The first day of the Pakistan government’s talks with the IMF on a new loan programme on Monday resulted in both sides laying out their positions, although not in agreement. The IMF has asked for further taxes to be levied, because with the taxation measures which have been put into place, it does not believe the Federal Board of Revenue will be able to achieve the tax collection figure it has been given. Instead of trusting Pakitan to reform its economy after approval of a loan, the IMF wants Pakistan to first meet these standards, and then ask for the loan. Pakistan, it should be noted, needs the loan for two reasons. The first is that the repayments it must make to the IMF this fiscal quarter is going to prove a great strain. The second is that Pakistan needs the loan, with its implications of IMF approval of its economic policies, for getting $5.6 billion in loans from other countries.

However, Finance Minister Ishaq Dar, who is leading the Pakistan team in the talks in Islamabad, is adamant that no fresh taxes can be imposed. This is appreciable, but the alternative that has been proposed is that of eliminating electricity subsidies. This would be done, just as the taxes would be imposed, to ensure that the budget deficit target is met. No attention is focused on reducing government expenditure, on trimming fat and stopping the extravagance of permanent officials and bloated numbers. There was also no mention made of ending the exemption from income tax of agricultural income, an exemption enjoyed by many MNAs, belonging to both Treasury and Opposition. This omission alone should demonstrate the true will of our government. As for eliminating the electricity subsidy, Punjab Chief Minister Mian Shahbaz Sharif had the rights of the matter when he told National Assembly Speaker Ayaz Sadiq, when he called on him at his office on Monday, that only the poor had a right to the subsidy. It is to be hoped that the government will suggest this in the talks, and will not jump at the subsidy withdrawal as a sort of substitute for raising taxes. Hopefully, there will be no triumphalist boasting that the subsidy withdrawal was not a raising of taxes.

That Senator Dar affirmed that Pakistan would set the conditions for the package, not the other way around, was heartening. However, that should not have as its corollary his pledge on Monday, not to let the country default. If there is no money, then there would not be an option. However, Pakistan will have to act as a careful and responsible member of the international economy, fulfilling its commitments, while at the same time ensuring that its own people, especially the poor, are protected by the state.