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Wednesday, March 22, 2023
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EditorialMuch-awaited IMF deal

Much-awaited IMF deal

All eyes are on the finance minister, who has, for days, been telling the nation about reaching an accord with the International Monetary Fund (IMF) so that the arrival of the tranche may boost the depleting foreign reservoirs. Monday was another day when Finance Minister Miftah Ismail again said he hoped the agreement with the IMF was a matter of days. The dollar flight has devalued the rupee to Rs212. No doubt, the minister has put in lots of efforts to clinch the deal, which, mainly, was stalled due to the backing out of the previous government on commitments made with the IMF. The incumbent government has tried to make up the trust gap between the two sides by increasing the petroleum, gas and electricity prices risking a huge public backlash and political cost. The IMF has, however, shown concerns on the budget figures, and has demanded heavy income tax imposition on the salaried as well as trading classes. To some extent, issues revolving macro targets set for the fiscal year 2022-23 have been resolved but all is not done, and to get these irritants removed, the government has sought the intervention of the US to get the bailout package approved from the IMF. There is no doubt that the US can help Pakistan as it wields huge influence on the IMF and the World Bank, and it is a welcome sign that the US has agreed to speak to the IMF bosses. The bailout package will provide the government $6 billion, which may not last for a couple of months, but the package will give a boost to the country’s standing and at a later stage, a few friendly countries may line up to help the government with ready cheques. Also, Moody;s Investors Service, which has downgraded Pakistan’s credit rating to negative from stable, may review Pakistan’s outlook and help restore investors’ confidence in Pakistan. The coming fiscal year is tough for the government, as it needs $37 billion for debt services alone. Then comes hefty fuel and wheat import bills, which consume a large chunk of our reservoirs. Lately, we have woken up to the energy conservation issue, the same way, the nation should create out-of-box solutions to save fuel.

As the public feels the heat of the inflation, the Pakistan Tehreek-i-Insaf (PTI) has started agitating the public on the issue of inflation. Similar protests were registered by the ruling coalition parties when they were in opposition a few months back. Now when the country is teetering on the brink of default, and a Sri Lanka-like situation is being feared, it is imperative for both the opposition and the treasury to sit together and work on the ways to bail the country out of the crisis. The PTI government has a valuable experience of dealing with the severest economic crisis and coming out of it, while the coalition government also has experienced people, who have run government after government. Both sides must work together to get the budget passed as the budget must be passed by the IMF as well as the parliament. The coalition government also must accept the demands of the PTI regarding new elections.

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