Would it have been a tough decision for the IMF to extend Pakistans loan program? The Fund can be as testy as a coalition partner except, as opposed to the JUI(F), or even the MQM, it can wreak much greater havoc. An increased number of target killings here and there, deplorable as they may be, would pale in comparison with the machine of the state unable to keep afloat.
As opposed to coalition partners, however, it has to be granted that the Fund has been more than understanding. It has to be kept in mind that it was the government that went to the IMF and not the other way around. The precarious fiscal situation that the previous Shaukat Aziz-led financial team had created had left the PPP with no other choice. Back then, the government had been claiming that the loan was unconditional. Now, the spiel that it is giving for the imposition of the RGST centres primarily around the fact that it is, in fact, an IMF condition. This does not necessarily imply, however, that the government was lying then, or is lying now. The government was doing a bit of economising with the truth. The Fund did have conditions but those were already the policy decisions of the government. The imposition of the RGST, or VAT, or whatever one chooses to call it, was always on the cards, as it should be, regardless of which party were in power. Similar is the case about the abolition of subsidies in our already overburdened power grid.
Even though the government is woefully late in the time frame it had given the IMF for the imposition of the RGST, amongst other things, the Funds decision to extend the program would be in light of the fact that the government is actually trying hard to create a consensus on the issue. And it is high time the consensus is achieved. The best case for the RGST which is a regressive tax is its utility in enlarging the database for income tax which is a progressive tax. That should matter to an opposition which claims to be working for the interests of the common man more than any appeasement of the international Shylock with a track history of wrecking Third World economies.
