WHETHER one likes it or not, Pakistan signing up for a new IMF programme is almost a certainty. With foreign private or official capital inflows drying up, the State Bank of Pakistan’s foreign exchange reserves have slipped to $6.7bn from $10.8bn in July. The balance of payments situation is about to get precarious on account of IMF repayments stacked up at $3.49bn for the next 12 months. The timing for making a formal request for the new loan largely depends on the realisation or otherwise of the coalition support funds from the US. Unless we receive the CSF, we will need the fund programme before the end of the first quarter of the next year. This means we still have time for the new government to come in and take a decision according to its own economic plans, and the caretakers must refrain from taking such a crucial decision.

Preparations for the fund loan, however, must continue. If the SBP has set the tone for Pakistan’s return to the IMF fold by keeping its key policy rate unchanged despite a significant drop in inflation, the official delegation’s visit to Washington later this week may bridge some of the differences between the borrower and lender over the causes of and solutions to our economic troubles. Such a situation is not new to Pakistan. We have been here many a time in the past. However, the solutions to our worsening external account troubles are going to be tougher this time around. The time for free lunch is over. All energy subsidies will have to be eliminated, cost of credit raised and wide-ranging tax reforms implemented. That will make things tougher for both businesses and the poor, and further slow down growth and investment.

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Comments (8)

Mohammad Farooq
April 16, 2013 5:41 am
Well the previous Government simply siphoned out everything and I guess it is about time for us to beg more.
Salim
April 16, 2013 6:52 am
And yet many will vote for same people again which is very unfortunate.
Salim
April 16, 2013 6:52 am
"However, the solutions to our worsening external account troubles are going to be tougher this time around. The time for free lunch is over. All energy subsidies will have to be eliminated, cost of credit raised and wide-ranging tax reforms implemented. That will make things tougher for both businesses and the poor, and further slow down growth and investment." Nothing new, we read and hear all these sentences every time but nothing changes.
Husain Jan
April 16, 2013 7:03 am
The previous rulers of PPP delayed taking any decision just for nothing. It was a clear indication that PPP wanted the caretakers to take the decision so that negative impact of such a decision does not fall on its shoulders.
Tariq
April 16, 2013 10:50 am
Why not ask our "elite" to pay back some of the "looted wealth" to bail out their country, seeing they do not wish to pay any taxes?
Mustafa
April 16, 2013 2:17 pm
Sorry they busy running for election
Keti Zilgish
April 16, 2013 6:35 pm
"many will vote for same people again" because for the past 5 years they were bribed with free electricity and interest free loans (most likely written off). Representative Democracy (as opposed to Direct Democracy) is at fault not only in Pakistan but also in USA.
gp65
April 16, 2013 10:58 pm
True and Musharraf did the same.
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