There are many right ways to read the words of the International Monetary Fund, but the one wrong way to do so is to politicise them.

The Fund is neither a friend nor an enemy of the countries it interacts with, and this includes Pakistan. It is a lender of last resort whose primary duty it is to safeguard the international monetary system from the disruptive effects of sovereign default by any of its member countries.

Beyond this, it serves several other functions too, such as that of surveillance to detect and flag emerging vulnerabilities in a member country’s fiscal framework, as well as help it to overcome its balance-of-payments difficulties.

It is important to say all this here because, far too often, the IMF’s pronouncements pertaining to Pakistan are seen in sinister terms by the general public, and its helping hand is viewed as an ATM machine by policymakers.

Both these perceptions need to be set aside, even if for a moment, because the Fund has now spoken on Pakistan’s economic predicament for the first time since the new government came to power.

To start with, the Fund has not said anything that it was not already widely expected to say. It has pointed to “high fiscal and current account deficits, and low international reserves” as the signature features of the “difficult economic situation” the country is facing.

It does not use the word ‘crisis’ anywhere in the statement, for the simple reason that Pakistan is not experiencing an economic crisis — not yet anyway. It attributes the genesis of this “difficult economic situation” to an overvalued exchange rate and loose fiscal and monetary policies.

It says corrective steps began to be taken from December 2017, and lists them as a hike in interest rates, depreciation of the rupee, a rise in gas tariffs and new revenue measures announced in the ‘mini-budget’.

Many of these were taken before the PTI government came to power, meaning corrective action had begun long before the general elections in July.

It is essential to remember that, taken together, this amounts to nothing more than “steps that go in the right direction”.

Much more is obviously required, that the Fund lists as more hikes in gas and power tariffs, more revenue measures, further interest rate increases and exchange rate depreciations and credible action on public-sector enterprises.

Considering that the government’s search for alternative sources of funding from friendly countries and overseas Pakistanis has more or less dried up, while foreign exchange reserves are declining at an accelerating rate, the moment of truth is now practically upon us.

The PTI will not be the first government to implement a harsh macroeconomic adjustment programme, but going by its rhetoric, it wants to be the last. If it wants to live up to its promises, it needs to stare reality squarely in the face.

Published in Dawn, October 6th, 2018