Politics over IMF package

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THE threat hurled by the PTI governments in KP and Punjab not to implement the province-related conditions agreed to with the International Monetary Fund (IMF) is reflective of the extreme level of confrontation where the parties involved are showing least concern for the pretty precarious economic and financial conditions of the country.

In an unfortunate development, KP Finance Minister has written a letter to his counterpart in the Federal Government conveying that the KP Administration might find it difficult to run a provincial surplus this year in view of flood-related damages.

To take the threat to the extreme, the provincial minister gave the impression that a copy of the letter can also be forwarded to the IMF.

Things became murkier on Friday when former Information Minister and senior leader of PTI Fawad Chaudhry remarked that the deal with the IMF was now an improbability after refusal of the two provinces (including Punjab) to implement it.

The points raised by the KP Minister might be weighty and deserve to be discussed and resolved amicably through discussion and dialogue but the timing and the modus operandi used to underline the point of view of the provincial government is questionable.

The writing of the letter itself and its extreme projection through all means and that too only three days ahead of the crucial meeting of the IMF Board, which will approve the re-negotiated package and tranche for Pakistan, is rightly seen as an attempt to sabotage the hard-earned deal with the multilateral institution.

It was because of the serious nature of the issue that in a joint statement, political parties forming the coalition government reacted sharply, maintaining that the letter was a ploy to sink Pakistan in the flood of economic crisis.

The KP Government is entitled to agitate if the province was not getting its rightful share from the federal divisible pool but through a well laid down procedure of taking up the issues involved through correspondence and internal meetings and not through media as it could jeopardize the core economic interests of the country.

The provinces and even the federal government might not be able to achieve the goal of surplus budget as rescue, relief, rehabilitation and reconstruction activities in the flood affected areas in the length and breadth of the country would require huge resources.

It is understood that at some point of time, the Federal Government will have to approach the IMF for revision of some of the targets agreed to in the restructured deal in view of the ground realities and hopefully the IMF too would take a lenient view because of the devastation caused by rains and floods.

However, to hurl the threat of non-implementation to pressurize the Federal Government to accept financial demands of the province is unfortunate and smacks of insensitivity towards national issues.

It has to be kept in mind that the Federal Government has not obtained the IMF deal and firmed up external flows from other sources just for Islamabad Capital Territory (ICT) but for entire Pakistan and both the KP and Punjab Government are part of the country and they too would benefit if financial and economic conditions of Pakistan improve and a default is avoided.

It also needs to be kept in view that the original deal with the IMF was concluded by the PTI Government and it was derailed due to its violations by the then Government at the fag end of its tenure.

Had there been no deviations and violations, there would not have been the need to re-negotiate the accord and include additional conditions that have put more burden on the people of Pakistan.

We would also urge the Finance Minister not to rush in a hurry to impose GST on petroleum products as the economy is shattered further by ongoing floods and inflation-ridden people of Pakistan cannot afford more taxation on the already costly POL products.

The latest data released by the Government itself on Friday showed the inflation has reached to the all-time high of 44.58 percent due to the damage done to the perishables by incessant rains and floods.

Under these circumstances, the Government will have to convince the IMF about revision of some of the otherwise tough targets.

 

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