SHE came, she spoke, she left. In her two-day visit, the IMF’s managing director, Christine Lagarde, stayed on a single message: Pakistan has earned a “moment of opportunity” with stabilisation measures taken over the past three years under the IMF programme, but the real work of reforming the economy must now begin. She pointed to improvements in the fiscal accounts and reserves as achievements of the programme, while underlining that more work lay ahead for broadening the tax base, making growth more inclusive, and boosting competitiveness to raise exports. She peppered her speeches with quotes from the Quaid and Iqbal to urge the country’s leadership to look inward for the drivers of its future growth.
But there was an illusory halo that hung over her pronouncements. For one, the environment surrounding her visit provided stark examples of why Pakistan has been unable to focus on reforming its economy. The cutthroat nature of its politics formed the backdrop to her visit as the airwaves crackled with tension over an impending ‘shutdown’ of the capital by the PTI, while a massive terrorist attack in Quetta a day after her arrival underlined Pakistan’s enduring security challenges. The list of achievements the IMF chief listed under the programme also appeared to be selectively drawn. Yes, the macroeconomic scenario has stabilised since 2013, but the original programme promised a lot more. When the programme was originally approved by the board in September 2013, the IMF’s deputy managing director had himself said that “short-term macroeconomic measures must be complemented by significant structural and governance reforms” under the programme, pointing to the power sector as a crucial target of these reforms, and adding that “the trade regime needs to be liberalised, public-sector enterprises need to be restructured or privatised, and the business climate needs to be improved.”
Yet at the end of the programme, Ms Lagarde could only present the “short-term macroeconomic stabilisation” measures as the signature achievement of the programme, which, according to her, must now serve as the “foundation” upon which to undertake the structural reforms that we were told at the outset were a complementary part of the stabilisation effort. Fact is, there is far less to applaud at the end of this programme than she tried to claim. Moreover, the IMF chief’s remarks betrayed a paper-thin grasp of Pakistan’s realities and details of the programme and its implementation. She often made mistakes in presenting data or invoking historical precedents. Her words during the visit, in fact, left a sense that the IMF has given up on urging reform, hewing instead to a minimalist agenda of ensuring the country’s creditworthiness to its domestic and, more importantly, its international creditors. And on that front, the programme just concluded can indeed claim its biggest success.
Published in Dawn October 27th, 2016