- And the writing on the wall
Asad Omar’s recent interviews give the impression, at least, that the likely incoming government understands the magnitude of the economic problems facing the country. PML-N, in a similar situation, was rather proud of its accomplishments; even if one of the worst current account deficits in our history has brought up the possibility of bailout or even default. But telegraphing his plans to approach the Fund, even before formally taking office, might not have been such a good idea in the present political environment.
If he thought it would lay the groundwork as the paralysis of the caretaker setup ran its course, he was clearly wrong. To gauge the Brettonwood lenders’ willingness to cough up money one simply needs to look at Uncle Sam’s attitude. And since the Trump Administration has been slowly turning off the tap on Islamabad, it was not really surprising to see Pompeo in action merely at the idea of Pakistan going westwards with the begging bowl again. Now Asad will not only have to explain how our urgent concern is simply staying afloat not debt repayment, but he’s also had to promise to open the books regarding Chinese loans.
For all the tough talk, though, it is unlikely that Washington will allow Islamabad to go belly up. There’s the convincing argument, after all, that the days of runaway spending are in the past and the new government will exercise far more fiscal discipline. And fresh promises of help from Beijing, Riyadh, etc, are an important vote of confidence for PTI. However, till large sums of money are ensured Pakistan’s position will remain precarious. Asad Omar’s grand plans about a sovereign wealth fund (surprising for a country with no sovereign wealth, only huge debts) and holding companies to restructure PSEs, etc, are interesting and deserve a run. But they will remain only ideas till somebody from the outside helps us survive. And, if the foreign press is to be trusted, the Pompeo preamble might mean that the money would come but only if we play more politics with the Americans; perhaps help more proactively with the Afghan endgame.
