The main reason for the stock market bloodbath on Monday was that word got out about friendly countries – Saudi Arabia, UAE, and China in this case – being a little apprehensive about entertaining our requests of more loans till we sort matters out with the IMF and revive the stalled bailout program first. That’s a big problem for the new government because there’s no way the Fund will restart the $6 billion Extended Fund Facility (EFF) until all subsidies and exemptions are removed; which would require lifting the freeze on petrol and electricity prices that was put in place in the dying days of the PTI government. Prime Minister Shahbaz Sharif knows only too well that the minute he gives into this inevitability it would unleash a torrent of high prices as well as public backlash. Caving into the Fund and raising prices was precisely what he and his new allies used to attack the PTI government for, after all, and the optics of beginning by revoking the one people-friendly policy measure of the previous administration is unlikely to win him much political support at the moment; especially with the way PTI is undermining the credibility of the new setup at its public rallies. Yet if there’s no agreement with the IMF, there will be no other loans either; not even from iron brothers who’ve kept us solvent through thick and thin. And there’ll definitely be nothing from other financial institutions that we also borrow from, like the Asian Development Bank (ADB), etc. The state bank is too sovereign to borrow from following the SBP Amendment Bill and yields on T-bills have gone through the roof; making this form of debt completely unfeasible for the government. But if it doesn’t go back to the IMF right now, this is all it will have for a long time; which means it will soon have start openly talking about a phased default. All this ought to quickly take care of whatever momentum the government though it would build on the heels of its successful no-confidence ouster of the previous government. It means that the joyride that started when PML-N and its allies made history with the success of the no-confidence motion and went on as they distributed ministries among themselves has effectively come to a grinding halt. The finance ministry is scheduled to resume talks with the IMF on 18 May 2022 in Doha, Qatar, but everybody already knows that unless it walks in with the assurance that the subsidies will go, there is not going to be a deal. Shaukat Tarin thought, for the longest time, that he could keep some subsidies by toggling reserves and bring Fund round to his point of view, but he failed every time he tried. That’s why former PM Imran Khan’s decision to slash prices, just as the no-confidence motion was being filed, led a number of observers to think that he might already have factored in that his government would not present the next budget. So, the petrol price freeze is as good as gone. And before ordinary people throw a fit over it they should understand that they ultimately stand to lose in both scenarios. They’d take a big hit when prices return to the market’s cold-blooded equilibrium level, of course, but they would lose in a much bigger way if prices are kept artificially low, the current account implodes, and then they have to foot the bill through even higher taxes.