No to IMF bailout but . . .

ON the back of burgeoning current account deficit due to higher trade gap led by a significant increase in imports as compared to exports, the economic experts over the last few months had been painting a gloomy picture insisting the government will be left with no option but to finally seek another bailout package from the IMF to meet the financing requirements. However, government’s finance team headed by newly appointed Finance Minister Miftah Ismail appears to be exploring other options to avoid the IMF.
Addressing Post Budget news conference, Miftah Ismail made it clear that the government has no intention to approach the IMF for the bailout package saying that $ 1b loan financing was secured on Saturday and the foreign exchange reserves are expected to increase further in the month of June. Though the finance minister did not reveal the source of financing but there are reports that a Chinese bank has provided the amount and the country is expected to receive another $ 2b from other Chinese banks. This as well as launch of some bonds may help the country at this critical time to take the foreign exchange reserves to a reasonable level and finance the external debt servicing. But the fact of the matter is that these are loans that we have to repay, and time has come that our relevant quarters prepare a comprehensive strategy to end reliance on foreign debts. Addressing the media, Special Assistant on Revenue Haroon Akhtar was also optimistic saying there is no need to be panic as tried and tested measures have been taken for the economy, which are bearing fruits. Indeed the incentive package for exporters, increase in regulatory duty on luxury items and finally devaluation of currency have turned the tide, at least for now, but we understand much more needs to be done to free the country from the two-way crisis of current account deficit and increasing level of debt.
This time around the arrangement of finances from China may have saved the country from taking another bailout package from the IMF, which has conditions attached, but we need to fix these chronic problems. The budgetary proposals for next fiscal year envisages many incentives for the business community and we expect this will help not only generate economic activity but also bolster our exports. We really need to diversify our export basket by bringing in much needed value addition and competitiveness to the products that can be done by reducing the cost of inputs such as power and gas tariff. Then our overseas Pakistanis are a real asset for the country and they need to be encouraged and facilitated by all possible means so that the flow of remittances could be further enhanced which up till now have greatly helped the country bridge the widening gap between exports and imports.

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