FINANCE ADVISER Shaukat Tarin must have had to swallow a lot of his pride when he agreed to the harsh IMF conditions for the resumption of the suspended $6bn loan programme. After all, for the last seven months we have heard him say confidently that he would win back the Washington-based lender and secure a new, concessionary deal to match the government’s growth objectives. True, a few concessions have been secured here and there, but the conditions that he revealed on Tuesday leave little room for optimism: the IMF wants Islamabad to implement prior actions for the reinstatement of the programme. Mr Tarin and the government will now be implementing everything they had refused to in April thinking they could pursue their procyclical policies to push economic growth to improve the ruling party’s electoral prospects in 2023. That the IMF had no intention of softening its conditions was obvious from day one, despite Mr Tarin’s insistence that once the government had demonstrated the viability of its growth policies the Fund would let it have its way. The government also thought the US exit from Afghanistan would increase its leverage on the Biden administration. That gamble too hasn’t paid off. The dollars it was expecting will, perhaps, never arrive.

With the rupee falling to a record low last week and stocks plunging on delays in the finalisation of the IMF deal, it is imperative for cash-strapped Pakistan to re-enter the programme as early as possible. But the IMF is in no hurry to sign the deal despite the government’s increasing electricity prices and the State Bank starting the rollback of its monetary stimulus. The Fund wants the SBP Act amended to free the bank of political influence; it also wants expenditures cut and new taxes imposed before it agrees to the deal. Even the promised Saudi help of $4.2bn hasn’t materialised as yet, with Riyadh probably waiting for the IMF nod like other multilateral donors. With the current account under severe stress and Pakistan’s need for dollars rising by the day, the lender is aware Islamabad cannot pull off its budget or raise money from the global market without it. And it is using its leverage to make Mr Tarin and his team walk the path they were initially not prepared to take. So where does it leave those who had been harping on the growth mantra for months?

Published in Dawn, November 18th, 2021