One last time?

Given ongoing talks with the IMF, it is hard to escape the feeling that there is something that the current government is not telling us. Finance Minister Asad Umar confirmed on Wednesday that Pakistan is seeking its 19th IMF programme, which he promised will be the last one the country seeks. To start with, it is hard to forget that Ishaq Dar had toed the same line five years ago. If our history bears witness to one thing, it is that there is no such thing as a ‘last IMF programme’. The fact is borne out by Pakistan’s own chequered history with the ‘lender of last resort’ as well as the economic history of the world. Few have escaped the well-laid IMF debt trap. One must wonder if the self-portrayed economic ‘wizards’ who head the PTI economic team are aware of this – and whether the public narrative being presented is pure fiction. Why else would the finance minister declare the balance of payments crisis ‘over’ last week, only to confirm that Pakistan will seek a fairly large bailout from the IMF this week? Moreover, why would we be negotiating a bailout when we are reportedly waiting for China to help us out.

To start with, if Chinese and Saudi assistance has sufficiently addressed the balance of payments crisis, then there is no need to negotiate with the IMF. The IMF delegation could be told ‘thanks, but no thanks’ and the PTI could set its own course for the economy – however ill-thought it might be. To give over the fundamentals of economic policymaking so willingly in its first term in power is not a good sign. It is hard not to be disappointed by a political party that came into power with the promise that it knew how to fix Pakistan’s economy. One would have expected it to be ready to put up far more of a fight to determine economic policy during its tenure. It is an odd state of affairs to fight so hard to have control over policymaking in the country, only to be ready to give it up to the IMF within three months.

The essence of the matter is that the government has a $12 billion hole to plug in Pakistan’s balance of payments. After a week in which the IMF team has visited all kinds of government offices, including Nepra and BISP, there is a nagging feeling that the IMF is being granted unprecedented access to Pakistan’s economy. The Fund has also raised objections over crucial issues in the harmony of the federation, such as the NFC award, and suggested further increase in GST. It would be easy to be taken for a ride if this were the first time this was happening – but it is not. The hope is that this will not happen again, but history would call it wishful thinking.