Daily Times

Why, one is now forced to ask, was so much fuss made about cutting subsides, raising taxes, speeding up privatization, wrapping up the circular debt, raising the interest rate further, even presenting a super-expansionary budget, if Plan B was simply throwing in the towel? If the government is really so desperate for next $1 billion of the Extended Fund Facility (EFF), which it very clearly is, then why did it dance around the conditions since January last year? And what was it thinking all the time that it was boasting, especially since the budget, that it would get the Fund to see things its way?

Now who’s going to explain to businesses just why the concessionary credit and tax holidays, which they counted on when they took fresh loans and booked new orders, no longer exist and not only have their plans suddenly collapsed but they also owe a lot more money than they had calculated and there will be nothing to show for it? In this way the government created artificial demand to inflate a bubble only to agree to give it the needle; and all for no reason at all. Because if the people were going to be squeezed to keep IMF’s tap flowing, they it would have been better to do it almost two years ago.

Interestingly, news reports also mention that the Fund is asking for fixing a market rate of the dollar. It’s a bit rich of it to ask for this at this point because it was after all its own obsession with freeing currency controls that led to the rupee being devoured in the open market. These are very troubling times for Islamabad because nobody yet knows how seriously the budget will have to be changed to secure more funds. All this also changes Shaukat Tarin’s mission quite drastically since he would now have to do a very different job than the one he was brought on board for. The bottom-up novelty will have to wait and painful structural adjustment will be the order of the day.

There’s also something to be said about why the entire nation was misled with assurances of all-is-well when the talks were clearly collapsing in Washington. And why did the finance minister, now finance advisor, leave when the job was not quite done? What was so important that he had to leave the finance secretary in his place to plead for a plan that he conjured up? Answers, if nothing else, should be forthcoming quickly. *