Now stay the course
After much dilly-dallying on the issue it seems the PTI government has finally realized that an IMF bailout is the only viable option given the rapidly deteriorating macroeconomic condition of the country. A mission from the international donor agency on a week-long visit to Pakistan has urged further depreciation of the rupee and a hike in gas and electricity prices. These are unsaid preconditions to a possible bailout set by the IMF which Finance Minister Asad Umar has agreed to undertake indicating that the government will approach the IMF very soon. Depleting reserves and mounting fiscal deficit coupled with failed attempts to secure some dollars from friends like Saudi Arabia and China have perhaps made the PTI realize the gravity the situation. No one was expecting the moon from the incoming government in such a short period of time but a lot in terms of direction has remained missing. It was wrongly assumed by most that Asad Umar had a detailed short to medium term plan already prepared for when he took over the reins of the finance ministry. Instead what the country got was improvisation: blaming the previous government’s disastrous economic policies, cost cutting by reducing extravagances which is only good for optics rather than significant savings and increasing revenue by appealing to overseas Pakistanis for donations not to mention the pipe dream of bringing back those ‘billions of dollars of looted wealth stashed abroad’.
Now that a direction has been set the government has to stay the course and that will be tough because as with any IMF bailout tough unpopular decisions will need to be taken in a timely fashion. Having run his campaign on a platform of change that included ‘no more borrowing’ Imran Khan will certainly make his core voter base unhappy by going to the IMF not to mention members of his party that are opposed to a bailout by the IMF. But now is not the time to run a popularity contest; an IMF bailout is the need of the hour to immediately stabilize jittery markets and replenish fast depleting foreign exchange reserves to create room for the finance team to formulate long-term economic reforms that make us self-sufficient so that we don’t have to knock on the IMF’s door again.
