The Pakistan Tehreek-i-Insaf (PTI) government has finally announced the approval of a $6 billion International Monetary Fund (IMF) bailout to save Pakistan’s floundering economy over the next three years. Alongside the bailout package, an additional $2-3 billion per annum is expected from the World Bank and the Asian Development Bank as a means to revive cash flow and keep the country’s economy from collapsing in on itself.

For the average Pakistani, there are hard times ahead, but nothing harder than what we have seen before. The conditions are also not new; a further devaluation of the dollar – one of the loan conditions being that the Pakistani rupee will not be artificially overvalued and will be allowed to stabilise according to the market rate – is to be expected, with increased costs of many exports also on the cards.

The government must also bring its expenditures in line with its revenues; decreasing the former and increasing the latter to meet somewhere in the middle is important anyway if Pakistan is to aim for lasting stability. Cutting down costs on loss-making public sector enterprises, improving tax collection and facilitating trade are all goals that the government should be aiming for anyway, without having the IMF implement these structural reforms. The government is also increasing the budgets of social safety net schemes such as the Benazir Income Support Programme (BISP) and the Ehsas scheme in order to make the incoming crunch as bearable for those on the lower end of the socio-economic strata. Whether this plan will work though is questionable, BISP and Ehsas are not strong enough as welfare programmes to keep citizens above the poverty line on their own.

However, with a loss of over 2.7% in a single day since the IMF bailout announcement, it is clear that investors in Pakistan expect hard times ahead. With 21 bailout packages already received from the IMF, Pakistan is tied with Argentina for the highest number of loans sought from the international lending body. The focus then, for this government should be to make the structural reforms in a way that Pakistan does not have to approach the IMF with a begging bowl in hand once more. Even though the PTI government was in denial, asking for the IMF bailout package was a forgone conclusion. It is now up to this government to ensure we are never in the same predicament again.