Elusive deal

Published March 25, 2023

CAN the government be trusted any longer about anything it says regarding the ongoing negotiations with the IMF? Days have turned into weeks and weeks into months, yet Finance Minister Ishaq Dar continues to insist on the imminency of a deal despite having nothing to show for his six months of efforts.

This ongoing week has now seen matters take a deeply embarrassing turn. On two occasions, the IMF’s country representative had to issue statements that appeared to contradict quite explicitly the finance ministry’s posturing on several key matters.

First, Esther Perez Ruiz, in response to journalists’ queries over a statement from the finance minister, rebutted the perception that the lending agency had sought compromises from Pakistan over its nuclear programme.

Then, she had to issue a statement underlining that the IMF ought to be kept out of the country’s internal politics and clarify that its programme requirements had nothing to do with election funding.

That is not all: it appears that the IMF has not taken lightly the government’s blindsiding of the Fund with a recently announced measure aimed at providing ‘public relief’.

It had emerged earlier this week that the government’s political stunt of introducing a cross-subsidy on petrol — under which the ‘rich’ will pay Rs100 more per litre of fuel and the ‘poor’ Rs100 less — had never been discussed with the IMF.

The lender has now confirmed that the government must satisfy it regarding its plans before the process for approving the release of requested funds can move ahead.

Since the government itself is unsure about the modalities of this subsidy — it has given itself six weeks to work out a mechanism — it seems it is not in a position to clear an IMF review of the matter anytime soon. In other words, it has delayed the finalisation of a potential agreement by its own hand.

It is unclear what the decision-makers sitting in Islamabad want. On the one hand, they remain unable to convince the IMF or any other international lender to bail the country out of its present crisis.

On the other, they seem to be acting in bad faith as they are cynically using the delays in reaching an agreement for political mileage. This would seem to be a rather unprofessional approach to negotiating with any creditor — least of all, the world’s most powerful multilateral lending agency, which was till recently only seeking commitments from the country’s rulers that they would work on fixing the severe imbalances in its economy.

Given how terribly incapable this government, especially our current finance minister, has proven to be in its management of the economy, one can only hope that matters haven’t simply been left wholly to the fates to decide. The cost of ineptitude will be brutal.

Published in Dawn, March 25th, 2023

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