What about IMF?
Any foreign exchange inflow at the moment is no doubt a godsend for Pakistan, but the finance minister needs to be careful about ‘translating’ the UAE bailout – another $3b – for investors properly lest he trigger another beeline to the departure lounge. Didn’t the government claim, time and again, that the Saudi loan a month or two ago was “without any conditions”? But eventually Asad Umer had to explain, just as the second Saudi billion (dollars) was parked in state bank vaults, that the bailout indeed carried a 3.18pc interest rate. Combine that with unprecedented volatility in the currency and the region’s worst performing equity market second year running and the FPI (foreign portfolio investment) exodus doesn’t seem so strange anymore.
Once again it is not what the government is doing, rather how it is doing it. Any help in shoring up reserves is always welcome, and appreciated, but keeping investors in the dark can quickly become counter-productive, as we have experienced very recently. So let everybody know, for starters, if this is a deposit, grant, loan or an investment package. And how much interest rate will it carry?
This is a bailout, after all, and it will not turn the economy around in any way. The stock market – which PTI used to trumpet as a ‘barometer of the economy’ whenever it went south in the PML-N days – completely brushed aside this story. Not only did it not trigger buying, it actually led to sudden selling and wild gyrations. And while the finance minister explains this package in detail, will he also shed some light on just how much of our immediate financing needs have been met, so we can know how much remains? Also please let the market know, once and for all, the future regarding a possible IMF program. Why are there constant denials in the media yet more meetings with the Fund? And who exactly are we trying to impress by raising taxes, calling for another budget, etc, if we do not need the IMF anymore? Some clarity, please, or there’ll be little to celebrate about these bailouts.
