- Imbalances and neglect of reforms plague economy
The inevitable event has occurred and Pakistan is sheepishly turning again to IMF for a bailout to avoid default and paralysis of its economy and banking system. The PTI government attempted, in line with its previous sharp utterances against begging bowls, to find a middle way out of the looming crisis, the deposit of ‘untouchable’ hard currency with State Bank of Pakistan by friendly countries. It is a blessing in disguise that this artificial and contrived solution failed to materialise, resulting in the more systematic, properly designed, and well-monitored lending recourse offered by IMF, though the latter too is not without its ‘collateral damage’.
The prime minister on Sunday chaired a meeting of leading industrialists, businessmen and economists, seeking their input and expertise to steer the storm-troubled ship of the national economy to the far shore. It highlighted the familiar issues to which lip service was often paid in the past, but no political will or seriousness shown in implementing related structural reform. These included severely curtailing imports, massively boosting abysmal exports, strengthening local industry and high-potential agriculture by providing better opportunities and development skills, and restoring the business community’s confidence, in part by keeping a rein on alleged NAB ‘harassment’. The PTI’s five million housing construction project was appreciated, as it would also benefit about 70 allied industries. Defaulting Greece recently successfully exited an 8-year IMF bailout programme started in 2010, to the tune of £258 billion, and Argentina has requested disbursement of £37.2 billion sanctioned by IMF in June 2018. Our $7-8 billion bailout is peanuts compared to these, but any accompanying economic and social misery must fall most lightly on already poverty-stricken, vulnerable segments. The Greeks made terrible initial sacrifices: salaries, pensions slashed, small businesses folded, financial output dropped, savings lost value, unemployment and suicides increased, but now ‘the worst is over, they are ‘out of the woods’. For Pakistan, an additional complication is belligerent US statements linking the country’s mounting external debt to CPEC-related loans. With the latter’s greater voting rights in IMF, there is no knowing what the lender’s final invoice for not keeping our finances in order, will be. After the feast, comes the bill!
