While Senator Ishaq Dar has said that the incoming government will try to reduce dependence on foreign loans, economists and private-sector stakeholders have said that the fall in the foreign exchange reserves might mean that the country will have to go to the International Monetary Fund for a bailout package. There is an element of a built-in crisis, with the pressure on the reserves coming from the repayments being made to the IMF, on the package that had been made available because of Pakistan’s foreign exchange difficulties. In short, Pakistan has not been able to export enough to pay for both its imports, and its debt repayments. Senator Dar is the PML-N pointman on the 2013-14 budget now being prepared, and is tipped to be given the Finance portfolio in the incoming government. While talking to the press in Lahore on Monday, he also spoke about the need to end loadshedding, which had proved heavily damaging to the economy.
Talking to this newspaper the same day, economic experts also referred to the need to end loadshedding, and stressed that a bailout would not be more than a short-term solution. Those favouring a bailout package said that it was essential to bring in foreign direct investment, without which the economy could not be revived. It should not be forgotten that an IMF package is always accompanied by stringent conditionalities, generally anti-people, and are accompanied by political. Thus Pakistan’s urgency for a bailout must be seen against the backdrop of a new government being elected in Pakistan, and its task ahead of dealing with a neighbouring Afghanistan in crisis after the withdrawal of NATO troops, the resulting insecurity within Pakistan’s own borders, and the beginnings of an effort for Pakistan to re-engage with the world, without a begging bowl in hand.
As a long-term dependence on the IMF is not being recommended by anyone, and even short term loans from the IMF will serve only to stabilize the economy while a home-grown economic revival is put into effect, the people deserve to hear more about the details of this home-grown economic revival package, instead of the IMF deal. PMLN’s economic team has been bunkered down in headquarters meeting with economists, businessmen and policy advisors from across Pakistan. A rigorous, well-thought out plan is needed, if Pakistan is to finally put a stop to perennial borrowing from the IMF, which has so far only kept it afloat, not afforded its economy an opportunity to grow. Growth, not just stability, is the most important order of the day.