IT has been a long wait. It seems that the IMF is still refusing to budge, even as Pakistani authorities thought the bailout loan would be finalised and the long-stalled funding programme resumed after confirmation of the promised financial assistance from Saudi Arabia and UAE.
That the demand from the IMF for further assurances to seal the deal came just around the time Prime Minister Shehbaz Sharif was assuring the markets that the lender had now no reason to put off its approval for the staff-level agreement after “friendly countries” had given monetary assurances was quite surprising.
Indeed, other nations in financial distress, such as Sri Lanka, Zambia, etc, also had to wait — for a longer time than usual — to finalise their respective loan deals with the IMF in recent months owing to the clash between China and the Western economies over how to provide relief to poor and middle-income countries. But in Pakistan’s case, the Fund appears to have little justification to further delay the resumption of the programme.
Initially, the IMF’s reluctance to complete the performance review and its insistence on the implementation of harsh prior actions were seen as the outcome of the deepening trust gap between the Fund and Pakistan due to the repeated breach of programme targets by both previous dispensations and the present government. But the IMF kept delaying matters despite the PDM government executing practically all prior actions to qualify for the Fund’s dollars.
This hasn’t helped the IMF’s image in Pakistan as the delay in the release of the funds is compounding the financial woes of a country hit by consistently soaring prices, for which the Fund’s stringent conditions for assistance are partly responsible.
But while there is every reason to be puzzled by the IMF’s stance regarding the delay in the restoration of the programme, Pakistan’s politicians and policymakers need to learn some hard lessons from the way multilateral and bilateral lenders have acted this time. They must realise that the world has changed a great deal in the last two decades.
The world is no longer ready to help those who don’t help themselves. The Saudis have repeatedly said of late that they want Pakistan to work within IMF discipline and tax its people if it wants the kingdom’s money to fix its external account. Others have told us the same thing.
The Americans said as much after the catastrophic 2010 floods. We did not listen to them then, and continue to ignore such warnings. But for how long? True, this time too we may get help sooner or later. But unless our politicians and policymakers take and act on hard decisions, the world will no longer step in to rescue us from a mess of our own making.
Published in Dawn, April 18th, 2023
