Pakistan squirms at IMF's demand to cut salaries of govt employees; cites inflation

Pakistan has rejected demand me by International Monetary Fund (IMF) to freeze salaries of government employees. According to Pakistani channel Dunya News, sources close to matter informed that IMF urged Pakistan for spending cuts in next budget during talks via video conferencing. However, Islamab said that it cant cut salaries of government employees as it is necessary to protect government employees and pensioners from inflation.

Pakistan finding it hard to concede to IMF's demand

Pakistan government will unveil its budget on June 12 and is struggling to strike a balance between continuing with fiscal consolidation and providing momentum to ecomic growth. Pakistan is finding it hard to concede to demands but IMF is insisting that country should continue to follow fiscal consolidation path due to high and unsustainable public debt, Express Tribune reported on Friday.

Owing to prevailing tight fiscal situation, growing public debt and Pakistan's decision to seek debt relief from G-20 countries, International Monetary Fund has asked Islamab to freeze salaries of government employees, daily reported, citing sources in Ministry of Finance.

neless, government is inclined to abolish over 67,000 posts that have remained vacant for over one year and is also rey to furr squeeze current expenditures including a ban on purchase of vehicles. Pakistan owes a considerable amount to IMF, which has routinely bailed it out, and hence, is required to comply with terms agreed to while aid is being given out.

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Pak govt inclined to give a raise in salaries

IMF's key demand, which was also reason for seeking to freeze salaries, was that government should anunce a primary budget deficit target total deficit excluding interest payments of only Rs 184 billion or 0.4% of gross domestic product (GDP).

Pakistan has its own reasons for resisting IMF's demands as it does t see a significant jump in revenue collection in next fiscal year due to prevailing ecomic conditions. government is also inclined to give a raise in salaries due to high inflation that has eroded real income of people, daily reported.

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(With ncy inputs)