- By fulfilling tough preconditions
As soon as there was confirmation that Pakistan had secured in principle a 13th IMF bailout package of $6 billion over 3 years, the rupee went into a free fall against the dollar, reaching a record low of 150 in the open market and 148 in the interbank. Simultaneously there was a bloodbath at the stock exchange, with the benchmark KSE-100 index losing 900 points on Friday confirming that despite the IMF deal uncertainty still loomed large. The ripple effects of this sharp increase in the price of the dollar has already started becoming visible as OGRA yesterday recommended a 47 per cent hike in the gas tariff by July (start of new fiscal year) based on the new exchange rate. Small businesses and retailers waste no time in jacking up their prices with successive devaluations of the rupee, seeing an opportunity to maximise their profits on goods imported at a much lower exchange rate as the market adjusts. The government is reluctant to admit it but it is plain to see how the IMF’s chokehold is tightening as we approach the PTI’s first budget. As things progress the Fund will continue claiming its pound of flesh by demanding similar hikes in gas prices, rupee devaluation and petrol prices before any disbursements are made.
It took all of nine months to erode the optimism within the senior leadership of the PTI and those who voted for them as it became clear that the country’s economic troubles could not be solved by an inexperienced team with no plan. As usual, it is the common man who will suffer the most when inflation hits another high and basic necessities become unaffordable. Had PM Imran Khan gone to the IMF at the beginning of his administration instead of trying to gain brownie points for avoiding the Fund, perhaps a better deal could have been secured. The exhaustingly over-repeated mantra that “the previous governments are to blame for this mess” has started to become stale and has been replaced with “don’t worry, be patient and endure”. Apart from being a slap in the face of those struggling to make ends meet it also seems defeatist. More, much more was expected from Mr Khan.
