Fearful of the speedy economic development of China and its increasing influence in the world the US has on the one hand imposed a trade war on Beijing and on the other it has started a red mark campaign against BRI and its focal point the CPEC. However, understanding the seriousness of the financial crisis Pakistan is presently facing China has approved its choice to seek IMF bailout package. We hope that no matter what reservations exist about the CPEC, would end during the PM’s trip to China to sign a framework accord on industrial zones, agricultural cooperation and social sector joint working group. Those criticizing IMF question as to why its bailout packages could not change the borrowing country’s economic condition. They quote Latin America plus Brazil and Mexico cases as failure of IMF. Greece is also quoted taking three bailout packages amounting to USD 345 billion, but has not been able to save its economy from an enduring wreck. Nonetheless, Pakistan’s case has been different over consecutive periods. For instance, once Pakistan borrowed from the IMF on a short-term Standby Arrangement, valued at USD 3.4 billion in total. These borrowings were used for revolution in the agriculture sector and power generation projects that led to economic development. In a nutshell, the loan amount was used as an impetus for development. Turkey has had a comparable case. Its dealings with the IMF go back to 1950s. Istanbul conducted 17 Standby Agreements till 2001. But, in 2001, the post-agreement structural implementation was dissimilar. Severe adjustment processes were put in place. It stimulated political turmoil and the ruling party was outnumbered in the national elections that saw AKP coming into power. The reforms still continued and the major changes made incorporated monitoring or bans by an independent institution and the Central Bank was made independent. Of course, there are cases which illustrate the potential of IMF loan if used strategically. Pakistan has now reached out to the IMF for a bailout package of USD 7-8 billion. This contrasts to the last figure of USD 6.6 billion in 2013 disbursed over a period of three years. There was no significant increase in the tax base. The state-owned companies such as PIA were not restructured. The economy did show growth, with an increase in stocks, stable currency and foreign exchange reserves reaching a record high amount. Nevertheless, the rebound was undone as higher oil prices and growth boom pushed up demand for imports. As a result, the current-account gap widened and reserves started to slide. Now all depends on how the government is going to boost the national income by widening the tax base, foreign remittances and curbing money laundering?
Government to boost the national income by widening the tax base, foreign remittances and curbing money laundering.