The government seems to have painted itself into a corner with the IMF, to the extent that the existing $6 billion package is in danger of collapsing, as it seems that the package, suspended since the Covid-19 pandemic set in, can only be revived if the government takes measures that it considers political suicide. The problem with letting the IMF programme lapse is that it would mean that the World Bank and the Asian Development Bank may then withdraw the balance of payments packages they had given only because the IMF had signaled its satisfaction with Pakistan’s economic policies by giving its package.
The PTI had come to office vowing that it would not turn to the IMF, but it did so. It came under tremendous flak when its policies to get the IMF programme virtually destroyed the economy. The destruction was not complete, but then the Covid-19 epidemic hit, with a revival that it may be imagining to be much more than it really is. The points on which the government finds itself unable to agree are hikes in the electricity tariff as well as further squeezing of existing taxpayers to raise revenues. The government reaslises that further tariff hikes and squeezing of the existing taxbase will not only cause a great deal of suffering, but also be politically damaging at a time when it faces an opposition bent on its downfall.
Prime Minister Imran Khan may have been right not to want to deal with the IMF. Whatever the reasons, he was stampeded into the decision, and now must live with it. Remaining with the programme will have consequences, but renegotiating a fresh package will mean accepting the conditions of this one. That is the lesson to be learnt from previous attempts to get a fresh package after getting off one, prematurely. It should not be forgotten that failure to meet the original conditionalities was the result of choice, and the government must now ensure that it makes policies sensibly and realistically. It must not look for painless decisions, for that wish is what created the present situation. https://www.pakistantoday.com.pk/2020/11/13/off-track-with-the-imf/
Off track with the IMF: Editorial in Pakistan Today, Nov 14, 2020
The government seems to have painted itself into a corner with the IMF, to the extent that the existing $6 billion package is in danger of collapsing, as it seems that the package, suspended since the Covid-19 pandemic set in, can only be revived if the government takes measures that it considers political suicide. The problem with letting the IMF programme lapse is that it would mean that the World Bank and the Asian Development Bank may then withdraw the balance of payments packages they had given only because the IMF had signaled its satisfaction with Pakistan’s economic policies by giving its package.
The PTI had come to office vowing that it would not turn to the IMF, but it did so. It came under tremendous flak when its policies to get the IMF programme virtually destroyed the economy. The destruction was not complete, but then the Covid-19 epidemic hit, with a revival that it may be imagining to be much more than it really is. The points on which the government finds itself unable to agree are hikes in the electricity tariff as well as further squeezing of existing taxpayers to raise revenues. The government reaslises that further tariff hikes and squeezing of the existing taxbase will not only cause a great deal of suffering, but also be politically damaging at a time when it faces an opposition bent on its downfall.
Prime Minister Imran Khan may have been right not to want to deal with the IMF. Whatever the reasons, he was stampeded into the decision, and now must live with it. Remaining with the programme will have consequences, but renegotiating a fresh package will mean accepting the conditions of this one. That is the lesson to be learnt from previous attempts to get a fresh package after getting off one, prematurely. It should not be forgotten that failure to meet the original conditionalities was the result of choice, and the government must now ensure that it makes policies sensibly and realistically. It must not look for painless decisions, for that wish is what created the present situation. https://www.pakistantoday.com.pk/2020/11/13/off-track-with-the-imf/
Published in Pak Media comment and Pakistan