The International Monetary Fund has approved a loan of $6.7 billion to Pakistan. Most of this money will go into loan repayments, not just to the IMF itself, but also to other lenders. So, why bother borrowing? Simply put, we spend more than we earn. Every time we ask for a loan, it is with the promise that we will not have to ask for another one. Assurances are made that we will finally start collecting taxes, documenting our black economy and generally behaving less like a banana republic.

The purpose of the IMF package is supposed to be helping the economy rebound, avoiding a balance of payments crisis, rebuilding reserves, and undertaking comprehensive structural reforms. Though the IMF will undertake quarterly reviews to check on progress, the package, given under the EFF (Extended Fund Facility), comes only after Pakistan made a budget with certain inbuilt conditions, which would help it meet repayment deadlines in future.

Pakistan’s fiscal ill-health has attracted little sympathy in the past. Our problems are not unique, the solutions are available, and a variety of factors in the Pakistani situation all but guarantee that it should be an economic success. Then why is the economy in tatters? Because no one has been willing to sacrifice their political popularity at the altar of some harsh, but necessary measures.

The present government is likely to regard this as a triumph, but at the same time it should not forget that though the package might last out its current tenure, repayments will then start falling due. The economy must be revived to the extent that the country can take on the loan burden on its own, or else it will face the daunting prospect of needing another IMF package to pay off this one too. The need for this package has been caused by past failures to introduce reform. It’s not rocket science; it’s just not popular with the electorate. Do it anyway.