Pakistan: Beggars can’t be choosers

Daily Times

The Pakistan Muslim League-Nawaz (PML-N) government and the IMF finally came to an agreement over the bailout package that is desperately needed to resuscitate Pakistan’s economy. Despite all the claims of the new government that it would break the begging bowl, the inevitable has happened as Pakistan seeks help from the IMF yet again. An agreement has been reached over a $ 5.3 billion three-year loan programme titled ‘Extended Fund Facility’. It has a repayment period of 10 years with an initial grace period of four years. The Ministry of Finance has requested an increase in the loan amount from $ 5.3 billion, which is 348 percent of Pakistan’s quota in the IMF, to $ 7.3 billion which is roughly 500 percent of Pakistan’s share in the IMF. IMF mission chief Geffrey Franks in a press conference stated that Pakistan would have to implement tough fiscal measures such as imposition of more taxes, withdrawal of tax exemptions, increase in power and tax tariffs, elimination of power tariff subsidies and privatisation or restructuring of public sector enterprises. Finance Minister Ishaq Dar and his team have vehemently tried to portray that the IMF loan is in line with the PML-N government’s homegrown fiscal policies and that the IMF had not dictated its terms in the agreed bailout package. Dar said that the conditions upon which the loan programme is contingent are part of the reforms PML-N had set forth in its party manifesto and which were also evident in the recent budget. This claim is false to the extent that in order to receive money from the IMF, the government has to levy new taxes, a measure that was not in the recent budget’s purview and had been denied until now as a possibility by Mr Dar. Moreover, the government will have to make some other tough decisions such as privatising public sector enterprises and reviving others such as PIA and the Railways that are bleeding heavily. Pakistan has had a long dismal history of borrowing from the IMF. Since 1988, Pakistan has engaged with the IMF in 11 loan programmes, out of which only four were termed successful by the IMF (and that too in terms of repayments made and not in terms of any positive effect on Pakistan’s economy). Considering Pakistan’s track record it comes as no surprise that, regardless of what the government might say, the terms offered by the IMF are harsh. The loan granted to the previous People’s Party government in 2008 was worth nearly $ 11.3 billion, significantly more than the present loan programme. The IMF was more generous last time, perhaps, to encourage the strengthening of democracy in Pakistan that had finally freed itself from General Pervez Musharraf’s dictatorial rule. The PML-N government should be honest with the nation. The elections of 2013 manifested the increased awareness of the people, who are in touch with ground realities. The People’s Party’s government was voted out as the electorate was quick to recognize that the government had failed to deliver. Mere promises and slogans are not enough to get the approval of the people anymore. The incumbent government will have to deliver in order to stay in the people’s good graces. It is advisable that the government should refrain from making promises it cannot keep as this would only raise undue expectations. Also, people should not be kept in the dark about national issues that affect everyone, such as the real state of the economy. We have witnessed how the government has had to take tough fiscal measures, and will further have to in the future, in conformity with the reforms prescribed in the loan programme. This is in sharp contrast to the dreamy picture that was being portrayed during the election campaign. The government should take necessary steps to educate the people about the current economic situation and the rationale behind the reforms that need to be introduced in order to achieve long-term economic growth.