Misleading the public
The talks held between Pakistan and the IMF with regards to the revival of the stalled $6 billion Extended Fund Facility Programme held at Doha recently remained inconclusive because the Fund insisted on the removal of the fuel and power subsidies as well as presenting the next budget for 2023 in line with the fund programme objectives. It is pertinent to mention that the PTI government, during the sixth review had promised to remove the subsidies, but immediately after the completion of the sixth review and release of $1 billion from the IMF, it went back on the pledge and announced unfunded IMF programme subsidies in February. The decision was a breach of the agreement with the IMF taken for political consideration. However, the government made no provision for financing the subsidies that it announced. It really further aggravated the economic situation.
So when the present government went to the IMF for the seventh review and revival of the programme, it found it really difficult to convince the Fund to release the vitally needed tranche. It clearly indicated that the IMF programme would only be revived once the government hikes the POL and electricity prices and also strictly follows the objectives of the IMF Programme. Therefore, the government had no choice but to raise the fuel prices. Finance Minister Miftah Ismail has expressed the hope that the talks with the IMF next month would produce positive results. In view of the precarious economic situation Pakistan is not only seeking revival for the stalled $6 billion programme but is also looking to have the size of the Extended Fund Facility (EFF) programme jacked up to $ 8 billion till June 2023. The current programme will be completed in September 2022.
It is really regrettable to note that when the PTI government used to raise fuel and electricity prices as per the requirement of the IMF agreement, the opposition which now is in the government, used to severely criticise it as an anti-people act and now, when the present government perforce had to remove subsidies the PTI is repeating the same rhetoric and taking a swipe at the government for withdrawing the subsidies. That is dirty politics and amounts to dishonest representation of the objectives of the IMF agreement and the economic compulsions for fear of public backlash.
The IMF promotes monetary cooperation and provides policy advice and capacity development support to preserve global macroeconomic and financial stability and help countries build and maintain strong economies. It also provides short- and medium-term loans and helps countries design policy programs to solve balance of payments problems when sufficient financing cannot be obtained to meet net international payments obligations. Under Extended Fund Facility, the IMF provides assistance to countries experiencing serious payment imbalances because of structural impediments or slow growth and an inherently weak balance-of-payments position. An EFF provides support for comprehensive programmes including the policies needed to correct structural imbalances over an extended period.
Pakistan seeking IMF bailouts is not something new and a recent phenomenon. Since 1958, Pakistan has availed the extended fund facility of the IMF for 22 times both by the civilian and military government without a break. Till today Pakistan has borrowed around SDR 13.79 billion from the IMF, out of which 47 percent of the loans were secured by PPP, followed by 35 percent by PML-N, while the military dictatorships lagged behind with a mere 18 percent. When it comes to securing loans from the IMF, the PPP is found to be far ahead in the game, having successfully borrowed from the IMF 10 times. Although the PML-N went to the IMF only four times, it secured a bigger number of loans than the dictators did during their power stints.
Imran Khan, who loathed and despised going to IMF before coming into power, was no exception to the practice of seeking IMF bailouts and his government negotiated a 6 billion dollar extended fund facility. As is evident, no government was ever able to put the country on the path of sustained economic growth and end our dependence on IMF bailouts in spite of the lofty claims about an economic turnaround.
All the stakeholders in the future of the country including the politicians must realise the gravity of the situation and join hands to extricate the country from the economic quagmire it is stuck into. If the country survives and prospers, it will be a win-win situation for all. Please prove your credentials of being patriotic Pakistanis.