The government must now be making preparations for painstaking talks to get a bailout package from the International Monetary Fund (IMF) to ward off an imminent balance of payment crisis.
The government must now be making preparations for painstaking talks to get a bailout package from the International Monetary Fund (IMF) to ward off an imminent balance of payment crisis.
The nation has not heard anything from the government side since Finance Minister Asad Umar announced in a video message that Prime Minister Imran Khan has given a green-signal to him to secure the bailout package from the IMF.
The announcement about Pakistan’s formal request came in a press statement from the IMF issued after talks between Asad Umar and IMF Managing Director Christine Lagarde in Indonesian tourist resort, Bali.
According to economic experts, Pakistan needs $12 billion in cash in the current fiscal year to meet external liabilities.
The government may pitch for around $8 billion package from the IMF while the remainder could be mobilised from the friendly countries notably China and Saudi Arabia.
But the main question is what would be the conditions laid down by the IMF for the Pakistani government to meet before approving the package.
The US role in securing this deal would be crucial for it being the major shareholder in the IMF finances.
It would be quite important to see as to what extent the downturn in the relations between Pakistan and the United States in recent years could impact the deal negotiations.
The recent statements from the US as well as the IMF suggest that the issues raised by US Secretary of State Mike Pompeo could weigh heavily on the talks.
Pompeo, soon after Pakistan Tehreek-e-Insaf (PTI) government came into power, had stated that Washington would ensure that in case of an agreement between Islamabad and the IMF, the loan is not used to pay back the money Pakistan had borrowed from China for the China-Pakistan Economic Corridor.
Given the growing rivalry between Beijing and Washington at the international arena, the United States has been at unease at the gigantic Chinese investment in CPEC as part of its Belt and Road Initiative (BRI), which the United States see as Chinese move to expand its clout across the world.
Pompeo’s remarks were echoed by the White House officials in their recent media remarks too.
State Department spokesperson Heather Nauert in a recent media interaction blamed Chinese loans as one of the major reasons for Pakistan’s economic woes and maintained that Washington would closely scrutinise Pakistan’s request from all angles.
“I think part of the reason that Pakistan found itself in this situation is Chinese debt and the fact that there is debt that governments have incurred that they maybe thought wouldn’t be so tough to bail themselves out of, but has become increasingly tough,” she said.
Earlier, IMF chief economist Maurice Obstfeld too urged Pakistan to review Chinese loans to avoid “excessive debts which cannot be repaid”.
The PTI government needs to robustly address these misgivings about the CPEC but unfortunately we have not seen such a response from the government officials, who have been dishing out conflicting signals over this issue.
The foreign ministry spokesman in a recent media briefing said the projects under the CPEC are not being reviewed and the recent trip by the Chief of the Army Staff General Qamar Javed Bajwa to Beijing was aimed at allaying Chinese leadership concerns but the controversy created by the Prime Minister’s advisor Abdul Razzaq Dawood over the issue has not yet fully settled.
Domestically, the government has to take belt-tightening measures to make itself eligible for the IMF loan.
The government leaders have repeatedly assured that they would ensure that such measures have minimum impact on poor and low-salaried segments of the society.
But the question is whether the government has the requisite political will and strength to sustain the political pressure, which might follow these measures.
If history is any guide, the successive governments have gone into agreements with the IMF in the past too but left them half-way through after they failed to sustain political pressure.
Moreover, such deals are meant to create a breathing space for the rulers to introduce much-needed economic reforms to put the economy on sound footing.
But the governments usually avoid undertaking painful reforms for political reasons.
Ironically, some economic experts have also been criticising IMF for its failure to ensure that reforms are properly implemented.
The previous government completed its three-year bailout programme with the IMF but only after several waivers granted by the international lenders.
The IMF used to lavishly praise economic management of the previous government after every quarterly review even after some important milestones were missed out. However, once the agreement was over, it started pointing out weakness in the economic management quite overtly.
Pakistan’s long-running economic woes can be adequately addressed only through homegrown measures but these steps could only be successfully implemented with the full support of all stakeholders including political opposition.
With government barely in power for a little over two months, its relations with the opposition are extremely tense and there is hardly any chance of improvement in them in near future.
The parliament seems to have been crippled in recent weeks over the deteriorating ties between the government and opposition.
The onus of responsibility to create a working environment in the parliament lies with the government. The government needs to show magnanimity and take a bold initiative to improve its ties with the opposition.
The opposition also needs to behave responsibly.
Both sides need to agree on a minimum agenda to ensure that pressing issues relating to public interest are not adversely affected.
The economic woes of the country over the last decade are mainly caused by the political uncertainty in the country as it carries the risk of derailing the national economic development agenda.
The political leadership needs to show maturity and it should ensure that economic agenda is not compromised regardless of who is in power.
The country is mired in a web of political, economic and security challenges and it can get out of it only if its entire leadership works responsibly, failing which these woes could become more challenging.
The writer is a senior journalist based in Islamabad
