The Fund isn’t happy
The WikiLeaks fiasco embarrassed many heavy hitters in both government and opposition. But the disclosures were not limited to national and international politics or even the war against terror. Financial matters also made their way into the diplomatic cables that were sent from Pakistan. Far less sellable commodities than their spicy political cousin, these cables do merit closer scrutiny. They reveal, for instance, a growing concern at the IMF about Pakistan’s enthusiasm for completing the aid program.
That would go a long way in explaining how the attitude of the Fund hasn’t thawed of late when it came to negotiations with Pakistan. Still missing several tranches, the government has been trying to appease the Fund but to no avail. Strictly speaking, the donor agency isn’t being fickle. It is clear that the government hasn’t lived up to its part of the bargain that was struck at the time of the loan programme. Neither have our reforms been moving at a fast enough pace nor has the government upgraded its capacity to perform on the key areas that the IMF demanded.
We are, for instance, nowhere near the tax reforms which would have translated into higher revenues. The politics of the issue is just too prickly. On the power sector reform front, though we have started slashing some subsidies – much to the ire of the bill-paying public – it hasn’t meant much because of the inefficiencies of the utilities companies. Many wonder whether the reform of the tax structure (if ever given the legislative go-ahead) would amount to the same; that the state’s revenue apparatus would not be able to manage all the chains of information that the RGST carrot-and-stick regime envisages.
One doesn’t need the exposes of WikiLeaks to know the IMF’s lack of faith in the government; it is writ large on all interactions of the fund with the government. They don’t want to engage in an activity that would amount to, in their view, throwing good money after bad. Anyone listening?
