Imran Khan’s government will propose a series of unpopular austerity measures to the Pakistani parliament in an effort to restore the stalled US$6 billion IMF loan program, which may cause intense economic pain when the economy is in deep pain. Political backlash.

A fiscal bill is expected to be submitted to the House of Commons on Wednesday, which will cut development expenditures, end subsidies in areas such as electricity and natural gas, and cancel sales tax concessions for raw materials and medicines.

These measures aim to raise 600 billion rupees (US$3.4 billion) in the fiscal year ending in June 2022.

The austerity policy was promoted after the IMF and Pakistani officials reached an agreement last month to repay the financial support package agreed in 2019.These measures are necessary to ensure the next $1 billion payment after the loan program Stagnated this year.

Pakistan’s economy has fallen into a difficult economic cycle, and the inflation rate remains high. Highest level in years Since May, the rupee has plunged 17% against the US dollar. Compared with the same period last year, the weekly index of daily necessities such as food and fuel soared by nearly 20%.

National Bank of Pakistan response Raise the benchmark interest rate A total of 250 basis points have risen twice since last month, to 9.75%.

The bill is expected to pass parliament, but the unpopularity of austerity measures exacerbated Khan’s growing political challenges. Critics say that cutting sales tax concessions will disproportionately hurt the poorest people, who bear the brunt of the surge in inflation, and the opposition plans to hold street protests against the government next year.

Khan wants to be one of the few elected leaders of Pakistan Complete his tenure, Will end in 2023.

After taking office, the Prime Minister vowed to end the boom and bust cycle that forced Pakistan to seek 12 IMF bailouts since the 1980s.However, concerns about the ever-increasing balance of payments crisis forced him to accept Unpopular terms of the fund.

Pakistan’s growth is still relatively strong, and Fitch’s rating is expected to reach about 4% this year. But analysts said that these measures may make life more difficult. Sakib Sherani, CEO of Macro Economic Insights, an Islamabad research firm, said: “The International Monetary Fund says you need to take steps to slow economic growth.”

Pakistan’s Finance Minister Shaukat Tallinn believes that existing concessions and subsidies are distorting the economy. “The International Monetary Fund is not saying you don’t help people,” he told reporters. “But they said not to distort the tax rate.”

But former prime minister and well-known opposition leader Shahid Hakan Abbas said that the parliament is rushing to reform. He added that since Khan became prime minister in 2018, the prices of daily necessities have risen by 50%.

“The reality is that the government has not met the conditions of the International Monetary Fund and they are seeking to fill the gap. Ordinary citizens will be hit hard,” he said. “There are serious upgrades, such as [the tariff for] Gas and electricity. “

Khan’s government will propose a separate bill to give the National Bank of Pakistan more autonomy, which is also what the International Monetary Fund is seeking. The bill will protect central bank governors from being removed by the government and restrict government borrowing.

But critics of the bill believe that these measures will make the central bank unable to take responsibility. A well-known business leader joked that the central bank governor would actually become “Pakistan’s first economic governor.”