As our politics begin to unravel, so does the prospect of securing financing from the IMF. We are engulfed with crises on all sides with no hopes of respite in the near future. Despite months of protracted negotiations, our attempts to appease the Washington-based lender have borne little fruit-debt default, once a remote possibility has now become an imminent risk. Without the funding assurances necessary to meet our fiscal responsibilities, it is unlikely that we will be able to restart the $6.5 billion bailout program that is crucial for our continued survival.
That being said, it will take more than a few friendly lenders to remedy the dysfunctional economic model that has marked Pakistan’s chequered history since its independence. This year, policymakers have adopted a more orthodox approach to improving our standing with the Fund-we have tightened our pursestrings, devalued an overvalued currency and hiked up interest rates by 400 basis points. While these developments are certainly promising, the IMF is not convinced that they are sustainable and we haven’t given them much reason to assume otherwise. Debt restructuring might be the only sustainable way to resolve Pakistan’s problems, but is sure to unleash even more pain on our already overburdened citizens.
With elections coming up this year and public discontent at an all-time high, investors believe it is unlikely that our policymakers will commit to further austerity, fearing increased public backlash. Avoiding reality has been Pakistan’s strategy for decades now. We go to the IMF, implement strict reforms for a short period and reverse them all as the second election season draws closer. Indeed, it is precisely this cycle of economic mismanagement, which has culminated in the crisis we face today. These last few weeks have proven that our commitment to the IMF is superficial at best. Now is the time to put political differences aside and work collectively towards convincing the world that we deserve another shot at fixing what is broken. Our selfishness has cost us a lot in the past. The question is whether we will bend in the face of adversity again or set the record straight once and for all. *