The IMF is playing cat and mouse with Pakistan, as despite reaching an agreement at staff level, the loaner was delaying the formal approval of its programme that has caused havoc in the economy of the country.
The IMF is playing cat and mouse with Pakistan, as despite reaching an agreement at staff level, the loaner was delaying the formal approval of its programme that has caused havoc in the economy of the country.
It is regrettable that the IMF forced the government to take so many steps in a hurry that caused resentment in the public. The coalition government conceded to the harsh demands that in fact were the need of the hour at the stake of its popularity.
Talks ended in June, but the formal announcement of the staff level agreement was announced on July 15. Usually after the staff level agreement, the approval from the IMF board is a formality.
An IMF staff member told newsmen that an IMF board meeting to approve the agreement is expected in three to six weeks. The IMF is taking things casually.
After the debacle in Sri Lanka, it must have taken the current economic situation seriously and called an emergency meeting of the board for approval of the agreement. The IMF has been doing so in many instances.
It seems that after Pakistan conceded to all demands of the IMF, the Bretton Woods institution had other goals in mind that could be achieved without the accent of the government of Pakistan.
Rupee value might be one target. The longer the IMF delays the tranche of $1.7 billion the pressure on rupee would intensify.
Had the tranche been approved soon after staff level agreement, the rupee would have appreciated to around Rs190 against a dollar from Rs207 when the staff level agreement was signed.
Most of the flow of dollars from the World Bank, the Asian Development Bank and friendly Gulf countries is linked to the approval of the IMF deal. Since the deal is delayed Pakistan is acutely short of foreign exchange.
This is an engineered attempt by the international community led by the IMF to bring Pakistan further down its knees. It is not fair. It confirms that beggars are not choosers.
It is a lesson for the nation to wake up and create resources from within the country to manage all its expenditures. We will have to service our loans for a long time to come and debt serving is our largest expenditure.
As we take more loans, the debt servicing burden would increase. When you are starved of resources the mark up on both domestic and foreign loans also goes up.
Even the friendly countries that used to give us grants of billions of dollars now charge commercial mark up on the deposits they place with the State Bank of Pakistan.
It is the time to cut expenses. Judges, generals, top bureaucrats must slash their pay and perks by 30 percent.
Number of ministers both at federal and provincial levels must be reduced to 15. There should not be more than two advisors or special assistants.
Purchase of new vehicles should be banned for three years. The government must bring complete transparency in its affairs.
Smuggling and tax evasion of any sort must be severely punished. Smuggling in fact speaks volumes about the ineffectiveness of our border security forces to curb inflows of contraband that might even contain arms and ammunition.
Inefficient and corrupt bureaucracy should be purged. Things would gradually improve as the governance bar goes up.
The writer is a staff memeber
