The International Monetary Fund (IMF) has urged Pakistan to freeze the salaries of government employees and follow the fiscal consolidation path, showing a slight primary deficit in the new budget. According to The Express Tribune, the IMF insisted that Pakistan should follow the fiscal consolidation path, as high and volatile public debt is set to affect 90 percent of the total value of the national economy.
The outbreak of the coronavirus exposed the weaknesses of Pakistan’s economy. Sources said that due to the current tight fiscal situation and Pakistan’s decision to get relief from debt from G20 countries, public debt is increasing. The IMF is asking Islamabad to freeze the salaries of government employees.
However, the government is opposing the demand due to high inflation which has eroded the real income of the people.
However, it is keen to eliminate more than 67,000 positions that have been vacant for more than a year and are ready to further reduce current spending, including restrictions on the purchase of vehicles. The government of Pakistan is set to present the budget on 12 June.