The IMF has asked cash-strapped Pakistan to freeze salaries of government employees, news agencies reported on Friday. It has also asked the country to stick to the path of fiscal consolidation. The country has a public debt of whopping 90% of the total value of the national economy.
Local media said that the country was resisting the demands but IMF was insisting on the same due to the high and unsustainable public debt. The country has also sought debt relief from G-20 countries.
Local media said that the government was resisting the demand as citizen’s real income was terribly low due to high inflation. The government is, however, mulling to do away with 67,000 posts that have remained vacant for over a year. It also plans to tighten the belt through a series of measures including a ban on purchase of vehicles.
The IMF’s key demand, which was also the reason for seeking to freeze the salaries, was that the government should announce a primary budget deficit target – total deficit excluding interest payments – of only Rs 184 billion or 0.4% of gross domestic product (GDP), an agency report said.