The population of Pakistan faces many economic difficulties (Anatolia)

Pakistan is moving to impose more measures that will directly affect the poor and middle classes, in order to confront the increasing economic pressures, and in application of the conditions of the International Monetary Fund for obtaining a lending program, and these measures include imposing more taxes and privatizing government companies.

In 2017, during a rare period of stability, Pakistan's middle class was seen as rising, with one study estimating that it made up about 40% of the population.

However, official data for 2019 indicate that about 30% of Pakistanis have an income of more than $10 a day, a standard that some economists use as a threshold for entering the global middle class.

The middle class is struggling

An American newspaper quoted Javed Ghani, vice chancellor of Al-Ghazali University in Karachi, who conducted research on the middle class in Pakistan, saying, “The middle class has been severely damaged in the past few years.”

Many families in the country, with a population of about 250 million people, say they are struggling to cling to the middle class amid suffering from high food and energy prices, according to a consumer trends report issued by the market research group “Ipsos”, which found that only one in 10 Pakistanis He believes that the country is moving in the right direction.

At the same time - according to the newspaper - families that are no longer poor, but are not middle class, have also lost their status. In the Pakistani fiscal year that ended last June, more than 12 million people fell into poverty, according to the World Bank, as measured by the standard of daily income ($3.65 per day). The number of people also reflects the impact of devastating floods in 2022.

Fixing the collapsing economy is the priority of the new government headed by Prime Minister Shehbaz Sharif, who took office this month after elections that political candidates and civil society observers claim were rigged. Economic growth has stalled and inflation has averaged nearly 30% in the current fiscal year in Pakistan. And debt is rising.

Part of a meeting of Pakistani officials (left) with the IMF mission in Islamabad a few days ago (French)

Negative growth

“Real economic growth, after taking population increases into account, may be negative,” said Ijaz Nabi, executive director of the Consortium for Development Policy Research, an economic think tank in Pakistan, calling on the government to focus on controlling inflation and gaining room for maneuver by reducing the deficit. .

He added, "The economy does not generate jobs, and you do not have the fiscal space to fix long-term problems."

In recognition of the difficult situation the country is going through, Muhammad Aurangzeb appointed a figure from outside the political parties as Minister of Finance. “We need surgery, and we cannot be satisfied with antibiotics,” Sharif said in the first cabinet meeting.

Aurangzeb, who previously worked at JP Morgan and headed one of the largest private banks in Pakistan, is charged with developing a long-term rescue program with the International Monetary Fund, whose loans are considered essential to enable Pakistan to repay its debts.

Pakistan has foreign currency reserves amounting to $8 billion, while it must provide $22 billion for debt payments and the current account deficit for the next fiscal year, which begins next July, according to the International Monetary Fund.

Pakistan has received loans from the IMF more than once, and the country is now seeking the 24th bailout plan, and the current temporary IMF loan expires next April.

A difficult life for many Pakistanis (Reuters)

Bitter medicine

The International Monetary Fund programs impose a bitter economic medicine, which previous Pakistani administrations struggled to adhere to in the face of popular opposition, and with Sharif heading a “fragile” coalition government, according to the newspaper, and facing a huge and angry opposition, this medicine will be more difficult to swallow this time, and the IMF paid Criticism The government has already increased taxes and reduced subsidies for utilities and fuel.

Electricity bills rose in the summer, and natural gas bills, used to heat homes in the winter, increased by more than 900% last February compared to the previous year, and prices are scheduled to rise again in the coming weeks.

forgery

In a speech in Parliament earlier this month, opposition bloc leader Omar Ayub Khan said Sharif is a prime minister who is “a fraud and has no right to implement reforms or impose new taxes.”

Political candidates linked to imprisoned opposition leader Imran Khan claimed that they would have won a majority in Parliament had the elections not been rigged, while Pakistani authorities deny rigging.

Khan's party urged the IMF to link future lending to an independent review of the election results, but the fund, which is already working with the new government, said the authorities should work to find a peaceful solution to the electoral disputes.

IMF again

The Fund said last Wednesday that Pakistan had met the necessary criteria to complete the temporary lending program that ends next April, adding that the country's economic situation had improved in recent months, but growth would be modest.

To reduce Pakistan's deficit, the Fund wants it to privatize loss-making state-owned companies, such as Pakistan International Airlines (PIA), which could lead to the loss of tens of thousands of jobs.

The Fund also wants to expand the tax base to include the retail, real estate, and agricultural sectors, which are important support bases for the coalition government, and the ratio of taxes to GDP in Pakistan is less than 10%.

Source: American press