DESPITE repeated statements from government leaders including Prime Minister Shehbaz Sharif and Finance Minister Ishaq Dar that the country has fulfilled all the pre-conditions for resumption of the stalled programme of the International Monetary Fund (IMF), latest reports indicate the global lender now wants to discuss plans for budget for the next financial year before signing of the Staff Level Agreement (SLA). IMF mission chief to Pakistan Nathan Porter told Reuters on Thursday that in all IMF programmes, the authorities issue a letter of intent associated with the last review outlining their policy intentions for the period after the programme.
It is now quite obvious that the IMF programme is being used to pressurize Pakistan on some key regional and global developments as there is no end to the ‘do more’ demands by the Fund. Forcing the Government to discuss the budgetary plans with the IMF is yet another instance of gross interference in the internal political situation of the country as an IMF-dictated budget could mean political death-knell for the coalition parties. It was previously believed that external financing was the last hurdle for the deal. Pakistan was required to give an assurance that its balance of payments deficit was fully financed for the fiscal year ending in June to unlock the next tranche of IMF funding. Thanks to the commitments made by some friendly countries, especially China and Saudi Arabia, Pakistan managed this obstacle but now discussions on the new budget could mean a virtual end of the programme with the IMF. It is known to all that the incumbent coalition government sacrificed its political capital because of the bitter and harsh decisions it took during the last one year at the instance of the Fund and it is widely believed that it will have to provide due relief to different segments of the society in the next budget to improve its chances in the general election. No political party can govern in isolation of the aspirations and needs of the people and that is why there are anticipation that the present government would announce relief measures in the new budget. However, according to a prominent economist the IMF wants to ensure that the government remains committed to the agreed path of fiscal consolidation as the country prepares for elections later this year. As the Government cannot afford a relief-less budget during the election year, there are two possible scenarios – no elections or say goodbye to IMF and the ground realities suggest the government will have to go for the second option. Pakistan Forex Association has already offered to meet foreign exchange requirements of the country and it is time the government concludes a deal with it for the sake of the country and to get rid of the IMF. Otherwise too, the mounting foreign debt is going beyond the repayment capacity of the country and, therefore, logic demands drawing up an elaborate plan to live within our own means. It is also the responsibility of other ministries and departments to extend a helping hand to the Finance Ministry to give a boost to the national economy through measures like skill development and rapid increase in manpower export for which prospects are quite bright.
