After months of flirtation with the idea of not seeking a bailout from the International Monetary Fund (IMF) it looks like Pakistan might be working with the IMF one final time. The Prime Minister held talks with the IMF Chief Christine Lagarde, indicating that the government is very close to securing a financial package from the international organisation.

It must be stressed that no official deal has been reached as of yet. Finance Minister Asad Umar has said that though there has not been an official agreement, differences between Pakistan and the IMF had decreased following Prime Minister’s fateful meeting with the IMF Chief. Khan has said there was “a convergence of views” between him and the IMF Chief when it came to the topic of deep structural reforms, and a press release issued by the IMF has said that the meeting between the Premier and Lagarde was “good and constructive”.

It is hoped that the long period of deliberation and uncertainty will pay off and the terms and conditions that are to come with the financial package will not be as restrictive as with previous bailouts. The IMF is asking for an adjustment of around Rs1,600-2,000 billion over three to four years. It also wants some “corrective measures to put Pakistan’s economy on the right track” after witnessing the highest-ever current account deficit. These “corrective measures” mean further devaluation of the rupee and cut in expenditures of Pakistan, which the government would have to compensate by reducing spending on subsidies or grants. These measures are bound to cause a further increase in prices, which will surely be unpopular domestically. It will be seen whether the government can negotiate through restrictive policy measures to secure a loan which is beneficial for all.

Some have criticised the governing party for reneging on its word and going to the IMF. Yet the government has adopted a relatively smart approach. By delaying going to the IMF and seeking bailout packages from other sources, Pakistan is now less dependent on the IMF and can negotiate on much better terms than what it could have gotten had we done so earlier. The current reserves crisis and the balance of payments problem made going to the IMF inevitable- the only conducive step that the government could have taken was to ensure the terms were not so strict that they became counter-productive.