TALKS between Pakistan and the International Monetary Fund (IMF) are reportedly lingering on as both the sides so far could not strike a broader agreement on a revised macroeconomic framework for the current fiscal year.
This might delay conclusion of the ninth review and release of $ 1 billion tranche till next calendar year.
Already economic experts are expressing grave concern over the current economic situation and voicing their fear that the country is at the edge of default.
In an article a few days back, former Finance Minister Miftah Ismail stated that the country’s risks of default has climbed up again and reached dangerous levels.
He was of the view that this risk won’t vanish even after the December bonds are paid off, adding we have no room left for error.
In this backdrop, the deadlock between Pakistan and IMF will only add to the uncertainty which will have a direct impact on our markets as well as the exchange rate.
Other financial institutions such as the World Bank and the Asian Development Bank will also hold up their disbursements until an agreement is reached with IMF.
We understand the current situation will give sleepless nights to those sitting in the Finance Ministry but they have to put the actual situation before the IMF officials which also needs to relax conditions in the face of the problems compounded by devastating floods in the country.
Having said so, time has come to prepare an exit strategy from the IMF which always dictates its terms to the government.
Also the current situation of taking new loans to pay off the previous loans is something that is not sustainable and acceptable.
Whilst resorting to austerity measures and cutting down unnecessary expenditure, the government will have to give serious consideration to uplift the industrial, agriculture and IT sectors to significantly bolster exports.
This is the only way through which we can break the begging bowl once and for all. Overseas Pakistanis must be given confidence and undue obstacles in the way of their investment need to be removed to change the country’s economic landscape.
