It appeared that the much-weakened currency was finally regaining some of its momentum, strengthening against the dollar for the third consecutive day. To our misfortune, the trend could not continue as it lost ground on Wednesday. Much of this stems from the expectations of reaching a staff-level agreement with the IMF that have increased now that the government has floated the currency, withdrawn export subsidies and imposed electricity sub-charges-a welcome development for Pakistan who is currently faced with a balance of payments crisis like no other. If negotiations succeed, the IMF will issue over $1 billion of a $6.5 billion bailout to Pakistan, critical for unlocking other sources of bilateral and multilateral funding. The IMF’s long list of conditions includes a market-based currency exchange and assurances that its balance of payments deficit is fully financed for the fiscal year ending in June. The country still needs to secure approximately $5 billion in external financing to close this deficit but investors remain reluctant to invest in the volatile economy over fears of low returns. Longtime ally China is the only country to commit a $1.3 billion loan to Pakistan so far and it will be many months before the country is able to get back on its feet. But for the first time in years, things are looking up with many analysts upbeat about the emerging market’s prospects. Pakistan’s international bonds also rose on Monday, adding as much as 1.2 cents to trade just over 44 cents in the dollar. Currently, Pakistani authorities are deliberating the imposition of a permanent power sub-charge to address the energy sector’s debt. The fiscal adjustments demanded, however, are likely to add to record-high inflation, signalling serious trouble for the average consumer. However, without increases in fuel and energy tariffs and structural adjustments to its tax policy, Pakistan will always teeter on the edge of an economic crisis. Pakistan is poised at an incredibly critical moment in time where the right fiscal choices and credit and trade policies can enable it to move past this rough patch and enter a new era where it can support its citizens. It remains to be seen whether our policymakers are willing to follow through. *