One may easily criticize Pakistan’s proposal floated to the International Monetary Fund (IMF) to extend the package to $8 billion from $6 billion and seek an extension of the programme by one year, and that too amid tight monitoring and checks and balances. In the present circumstances, the proposal is reasonable and should be accepted by the monetary leader as this is the only way to improve and maintain Pakistan’s balance of payments and foreign exchange reserves. As a government delegation is in the US to hold talks with the IMF, so far no word from the hosts has come forward to suggest either the success or failure of the talks. Finance Minister Miftah Ismail is, however, hopeful that staff-level talks with the IMF on the proposed extended programme would be completed soon. The next installment of $1bn could land soon in Pakistan’s central bank. The IMF would surely want to have strong commitments from Pakistan regarding the reforms before signing the cheque. Among the things that are of particular importance to the IMF is the fulfilment of the conditions it has offered to Islamabad in the past. Rightly or wrongly, these terms have been violated partially or completely for political reasons or to meet the domestic conditions. It will be necessary for the government to immediately withdraw the relief measures which are contrary to the guidelines of the Financial Fund.
On the contrary, the situation which existed before these measures should be restored. On the one hand, these measures are not in line with the conditions offered by the IMF but are largely contrary to them. For example, take the prices of petroleum products and electricity bills. Now, the government pays a huge amount of money as a subsidy for the rates at which it is selling petrol, diesel, and electricity. As Pakistan has been left with no choice but to go to the Fund, similarly, there is no choice but to withdraw subsidies. It is speculated that the pending tranche will be released after the federal budget reverses some of the recent steps taken before the budget and during budget preparation to rectify the shortcomings. Before that, the government needs to come up with a clear strategy. The finance minister is not clear about the State Bank of Pakistan’s sovereignty. It has become clear that the IMF programme is to be carried forward next year while maintaining it. The minister has also made it clear that there are no plans to raise tax rates this year, and the country’s fears of bankruptcy are unfounded. Money can be raised in the Benazir Income Support Program to reduce poverty. The new government has also made it clear that the previous government’s promises made to any country will be honoured because those commitments actually belong to the government of Pakistan. Unless the situation is not clearer, and the IMF tranche is not only restored but also the loan amount and the duration of the program are increased, we should keep our fingers crossed.
