After weeks of dithering and faltering, the Pakistan Tehreek-e-Insaf (PTI) government seems to have finally made up its mind to seek the International Monetary Fund (IMF) bailout package.
The formal announcement in this regard is still being withheld for reasons better known to the financial managers of the government but all indications now suggest that the government has decided to go for the inevitable.
Since the present government came into power, the Finance Minister Asad Umar never ruled out the possibility of the government invoking the IMF option but kept it at the bottom of his priority list.
Insiders say Prime Minister Imran Khan has also been reluctant to instantly go to the IMF and wanted to fully explore all other options before resorting to this.
A substantial help from the friendly countries like China and Saudi Arabia and launch of dollar and Islamic bonds or sukuk for the overseas Pakistanis were some of the other options the government explored but seems to have come to conclusion that these options alone could not be enough to help it cope with the twin challenges of current account and fiscal deficits.
Pakistan needs an immediate injection of cash worth $10 to $12 billion to get a breathing space before it enforces the much-needed fiscal and economic reforms.
The Asian Development Bank last month, in its report, predicted a slowdown in Pakistan’s growth to 4.8 percent but maintained that this growth too hinges on mobilisation of substantial external financing.
With country having foreign exchange reserves of only $6.3 billion, the steepest fall in years, and facing current account deficit of over $18 billion, there is no other option left for the government to raise funds to meet these challenges.
The recent visit of a staff team from the IMF is said to be aimed at preparing the ground for Pakistan to formally ask the international lender to arrange a bailout package.
Insiders say though government has formally decided to go for the IMF option but it might delay the formal announcement for political reasons.
The government is facing crucial bye elections in the middle of the current month. Any announcement before these elections would be politically harmful for the government as the opposition parties might exploit the move against the PTI which has been aggressively opposing foreign assistance.
So in all probability, the government is likely to formally request for the IMF package by the end of current month.
But before government does so, it has to take tough economic measures at home which might result in an increase in inflation and also cause unrest among general public.
The IMF mission at the end of its visit maintained that Pakistan is facing significant economic challenges which include declining growth, high fiscal and current account deficits and depleting foreign exchange reserves.
The mission appreciated the recent hike in power and gas charges as steps in the right direction but maintained that these are not sufficient.
“Decisive policy action and significant external financing will be needed to stabilise the economy,” the mission said in the statement.
Once stabilisation begins to take hold, increasing focus is warranted on critical reforms to foster sustained and inclusive growth and strengthen institutions.
All these actions need strong political will on the part of government as well as political stability in the country to succeed.
If government wants its agenda of stabilising the economy to succeed, it needs to have good working relations with the opposition as well as strong support from the parliament.
Unfortunately, signs on these two counts are not very encouraging.
Relations between the government and opposition have started deteriorating hardly a few weeks after the formation of the government.
The arrest of opposition leader in the National Assembly Shahbaz Sharif in a corruption scandal and announcements by the government ministers that more such arrests would be made in near future has stoked political tensions in the country. The opposition groups, including Pakistan People's Party have condemned the crackdown and maintained it is a witch-hunt and a victimisation campaign by the government against its political opponents.
The PTI, which fought July election under the slogan of accountability, says the crackdown is a genuine effort to weed out corruption from the country and it has nothing to do with this campaign and it is carried out by the anti-graft institutions.
It is about time for the government as well as other state institutions to take appropriate steps to ensure that the accountability drive does not degenerate into a political witch-hint like in the past.
The economic stability of the country heavily relies on political stability but unfortunately despite continuation of the democratic process for over a decade, political stability is still elusive in the country.
The details of the bailout package are yet to be negotiated but the world lender is expected to put tough preconditions before agreeing to lend the money as witnessed in the past.
The Pakistan Muslim League-Nawaz government enjoyed comfortable majority in the parliament yet it could not fully succeed in implementing its agenda aimed at reforming the national economy.
Its privatisation program was literally paralyzed because of the protests from the opposition as well as other stakeholders.
The PTI is in minority in the Senate while in National Assembly it has a razor-thin majority. In Punjab, the largest and politically the most important province, it faces a formidable opposition.
With such a weak political position, it is an uphill task for the PTI government to push through its economic agenda unless it strikes good working relationship with opposition.
The government needs to reach out to opposition parties to evolve an agreement that they would not allow their political tussles to negatively impact the economic agenda for the country.
The critical economic conditions of the country warrant all stakeholders to act responsibly. If they fail to do so, then the people would start losing their trust in the democratic system which would be detrimental not just for the political leadership but for the entire nation.
The writer is a senior journalist based in Islamabad