The International Monetary Fund (IMF) has finally approved $6 billion bailout package for Pakistan, almost 11 months after Pakistan Tehreek-e-Insaf (PTI) government came into power.
Though the government had managed to raise funds from the friendly countries to ward off an imminent danger of balance of payment crisis much before the IMF deal approval, but the agreement with the IMF was vital to restore confidence of the international financial institutions and financial markets to do business with Pakistan.
According to the de facto Finance Minister Abdul Hafeez Shaikh, the IMF deal would unlock around $38 billion for Pakistan from the international institutions over the next three years.
The Asian Development Bank (ADB), which had publically snubbed Shaikh for prematurely announcing the $3.4 billion budgetary support for three years before the IMF deal, is most likely to release a $2.1 billion tranche for this year from this financial backing in the coming months.
Though the government has been touting the securing of funds from the IMF and the friendly countries as a success, the real challenge that it faces is to take concrete measures to address the malaise afflicting Pakistan’s economy for decades.
It is not the first time that a government has secured funds from the IMF with a commitment to fix the economy; however, most of the times different regimes failed to repair the real problems afflicting the economy. The government needs to focus its full attention on fixing the economy for which it needs to create an enabling environment to implement its economic agenda.
There exists unprecedented harmony in civil-military ties but there is a need for political stability in the country in order to ensure success for the government’s efforts for economic stabilisation and achieving stability. The onus of creating such an environment squarely rests on the government.
Unfortunately it seems that the government has hired a team of technocrats to handle the economy of the country, while it has devoted itself to settling scores with its opponents.
In politics, the doors for negotiations should always remain open and every option should be explored to persuade the opposition to find a political solution to their problems.
Corruption is undoubtedly one of the major reasons hampering economic development of the country and generally there are no opinions on a crackdown on corruption.
However, regrettably, such crackdowns in the past ultimately turned out to be a smear campaign aimed at maligning and defaming the opposition.
Former military ruler General (Retd) Pervez Musharraf, after seizing power, launched a massive campaign against corruption but at the end made deals, even finalised a power-sharing agreement with the same persons who were accused of being corrupt.
Many of the turncoats of the previous governments, some of them facing corruption charges, have joined the ranks of the present government.
The government needs to make its drive against corruption credible by making it more partisan and impartial and it’s something that should not leave out any section of the ruling elite.Moreover, the government should invent novel ways of dealing with the economic challenges faced by the government.
When he was in opposition, Imran Khan was a vehement antagonist of amnesty schemes but had to announce one for unavoidable reasons and was about to extend its deadline for a longer period but had to abandon the plans in view of the IMF opposition.
The amnesty scheme though could raise money much lesser than the previous one but it has generated a large pool of people to be included in the tax net of the country.
The government needs to revamp the Federal Board of Revenue to make its tax collection system more credible.
Moreover, in order to lessen reliance on foreign exchange reserves largely built on borrowed money, the government needs to take urgent steps to earn foreign exchange.
Raising exports is the biggest challenge for the government. Despite massive devaluation of the rupee for more than a year, the exports of the country have not significantly clicked.
Though slowdown in the world economy is largely blamed for this and it is true to a large extent, the government needs to exhort exporters to make their products more competitive and also explore ways to find a big foothold for Pakistani goods in the international markets.
Prime Minister Imran Has enjoyed a big goodwill among Pakistani expatriates and they had been helpful in the realisation of his dream of building a state-of-the-art cancer hospital into a reality. He needs to use his clout with the overseas Pakistanis to convince them to take part in the national rebuilding.
As a first step, they should be exhorted to raise their remittances to Pakistan as it makes the key part for Pakistan’s efforts to earn foreign exchange and reduce its reliance on borrowed money.
After last year’s election, there has been a general feeling among overseas Pakistanis that there would relatively be a political stability in the country and there would be less politicking but their wishes seems to have died down.
Luring foreign and private investment is another key challenge for the government. The government needs to remove the bureaucratic bottlenecks in bringing in private investment in the country and it should ensure ease of doing business in the country.
Political stability paves the way for economic stability which in turn infuses confidence in the nation to deal confidently with other nations.
Pakistan faces many challenges on the external front. These challenges could be dealt with very amicably provided there is national coherence and harmony.
As a first step towards developing national cohesion, Prime Minister needs to rein in his ministers from issuing provocative statements and instead should concentrate on their work.
At the same time, he should take personal initiative to open a dialogue with the opposition in the parliament to evolve a mechanism to deal with the challenges faced by the country particularly on the economic front.
During the budget debate, some positive vibes came on the issue of forging a charter of economy but that proposal could not be turned into reality as both sides again bogged down in useless rhetoric.
The present situation could degenerate into another political crisis if timely steps are not taken to stem it.
The writer is a senior journalist based in Islamabad