Daily Times

As feared, the government is struggling to get the IMF Extended Fund Facility (EFF) back on track and has, for the first time, indicated that it might not be revived till the end of the year at the very least. While it is understandable that the government does not want to increase the electricity tariff or taxes right now, keeping in view the prevailing weak economic situation, the ruling party is still wrong to lay all the blame on the recession caused by the pandemic. No doubt the lockdown took a lot out of the economy, and has made it that much more difficult to implement contractionary policies that the Fund requires, but let’s not forget that prices were high and growth was low since well before the coronavirus stood everything on its head. And the program was taken off track, for precisely these reasons, before March, which is when the pandemic came to Pakistan.

There are also rumours that the government wishes to extend its support package for construction well beyond December till the middle of next year considering how it is stimulating activity across a broad range of industries. That’s another area where the ruling party’s own weak planning is to blame. Experts and analysts up and down the country had warned at the time of the announcement of the construction package that December was not a viable timeline for it to attract the kind of money that was needed but nobody paid much attention back then. And now they want to upset their own planning and do precisely what they ruled out just months ago.

It is also very important to note that sooner or later the government would have to revive the IMF program because it will find survival impossible without it for long. Clearly it is counting on some friends in the Gulf and China to agree to roll over some of our multi-billion dollar loans to provide some sort of cushion, but even if they get the answer they are looking for it will only buy them very limited time. There was a reason for the country to rush to the Fund in the first place, and that was a lurking Balance of Payments (BoP) disaster. The news just the other day that Pakistan’s external debt has now reached historic levels ought to be enough to tell everybody just what position our reserves are in. The government should do what it can to get the Fund to dilute some of its harsher conditions so the program can get back on track. *