The next tranche


A little tough love now and then wouldnt hurt our economic managers but the IMF should know how much is too much. The Funds patience, granted, is not unlimited, but it should cut the government some slack for the precarious political conditions it is in. The pressing issues of fiscal space that the present government was confronted with at the beginning of its term, a legacy of the previous regime, forced it to go running back to the international donor agency. The latters pound of flesh: serious structural readjustments, a lot of whom, the Fund thinks, have not been met adequately. That has put the next tranche of our seven-tranche loan program as risk. The IMF, unfortunately, is a tripwire that affects loan programs with other donor agencies as well, like the World Bank and the ADB.

There is a lot of pressure on the government not to phase out the subsidies on electricity and the IMF would have had to be pathologically unaware of its surroundings if it missed the hue and cry over the RGST issue. Despite thinning support from the allies and a rather unreasonably hostile press, the government has almost pushed the bill through. A little patience, now, for its actual imposition. This is directly related to another of the IMFs requirement, a curtailment of the budget deficit. Our revised deficit target is 4.7 percent, which the lending agency thinks we cannot meet with our expected revenue receipts.

For the government to cut unnecessary expenditures is always a good idea. But when you have a natural disaster of the scale we just witnessed, there is just no way getting around spending more. If the Fund is against that, the Default by Design movement should be given a serious look at.