LAHORE - The $6.7 billion International Monetary Fund (IMF) loan to Pakistan has brought mixed reactions from businessmen and economists, as some reacted sharply over the decision saying it would cause more problems for the business community, apart from bringing fresh wave of price hike but few said that government had no other option but to approach the IMF to control its fiscal imbalances.

They said that the IMF loan would have devastating effects on economy, as with more taxes, increased rates of utilities and cost of production would further increase. This will thus render Pakistani exports non-competitive in the globalised competitive environment, they feared.

All Pakistan Business Forum chairman Nabeel Hashmi, perturbed at the new government’s deviation from its election manifesto, said that this is not what PML-N promised the people of Pakistan. The IMF conditions already implemented in the budget 2-13-14 included power tariff hike, raise in petroleum prices, gradual end of subsidies, raise in sales tax, cut in fiscal deficit, improvement in tax-to-GDP ratio, enhancement in tax net and restructuring and privatization of public sector enterprises. The government has identified over 100 state-owned entities to be privatized and will take a decision before September 30.

Noted economist Dr Qais Aslam viewed that structural adjustments, privatisation, deregulation and macro economic intervention often make the situation worse. He argued that free market policies dictated by the IMF were not always suitable for the situation of the country. For example, privatisation will definitely lead to the creation of private monopolies who exploit consumers and work for maximizing profits. He argued that there are several examples of how the IMF failed to understand the dynamics of the country that they were dealing with.

President of India-Pakistan Chambers of Commerce & Industry in Pakistan and former state minister S. M. Muneer welcomed $6.7 billion loan from the International Monetary Fund, saying the programme is expected to help the economy rebound, forestall a balance-of-payments crisis and undertake comprehensive structural reforms to boost investment.

However, he observed that if pre-conditions are tough for the government to fulfill and the lender could cease the release of the loan, raising bigger challenges for the government.

Farhan Marwat, a financial market expert at JS Global Capital Limited, stated that the development is positive as it now paves the way for anticipated flows from other International Financial Institutions, including $1.5 billion from Asian Development Bank, $0.5 billion from World Bank and $1 billion from Islamic Development Bank, which were awaiting IMF’s green light and are crucial to shoring up Pakistan’s external account and creating much needed fiscal space.

Ex-regional president of the FPCCI Abdul Waheed Sandal appreciated the move, saying the government had no other option. He said that IMF loan package will pull the country out of financial crisis.

PTA central chairman Agha Saiddain observed that $4.8 billion out of $6.7 billion IMF new loan will be adjusted which was already borrowed from the donor. Hence, Pakistan will get actually less than $2 billion in cash as the IMF will say that remaining amount has been adjusted of the loan already given to Pakistan.

He asked the government to debate the matter of financial assistance from the International Monetary Fund (IMF) in the Parliament to evolve a firm policy to ensure judicious use of the amount of IMF loan. He said that the people would not be benefited by the IMF loan, as the rulers would continue lavish spending. He also lamented the rulers were not bringing back their money kept in the foreign countries.