The ongoing talks between Pakistan and the IMF have failed, and the cash-strapped country would no more get any financial support from the world’s top lender as the current program expires on the 30th of this month. Although the finance ministry tried to convince the IMF about Pakistan’s position on different reservations and conditions of the global lender those efforts failed to produce the desired results. The news surely fuel the speculations that Pakistan would default in the coming months as many experts and global institutions have already warned about the possibility. According to the reports, Pakistan is not on the agenda of the IMF Executive Board meetings scheduled to be held from June 20 to June 29. The country could not secure the IMF’s final approval of the pending 9th review under the EFF program which will expire on June 30 without the disbursal of the remaining $2.6 billion out of a total of $6.5 billion program. In this way, Mr. Dar achieved another milestone of creating havoc through unmeasured policies and unnecessary overconfidence.
Pakistan had been struggling to revive the IMF $6.5 billion Extended Facility Fund (EFF) which it secured in 2019 but the talks between the lingering South Asian economy and the International Monetary Fund (IMF) struck a deadlock over policy matters primarily on currency regulation and subsidies by the government. The country has been awaiting the IMF’s final approval of the pending 9th review under the EFF program but the stubborn global lender did not move one inch from its position and Dar’s dogma left no hope for any possibility of making progress on the 10th review and any reunion between Pakistan and the IMF at the crucial period in Country’s history.
Pakistan and the IMF remained at odds and there had been exchanges of statements and accusations between high-ups of the Washington-based global financial institution and Pakistani authorities. The IMF handed over a long wish list to Pakistani authorities to put their house to achieve IMF backing and get the release of a highly essential $1.2 billion tranche from the global lender. The coalition government adopted various administrative and tax reforms and received funds and assurances from friendly nations to get the nod from the IMF. However, the IMF continuously accused Pakistan of controlling the rupee exchange rate artificially and not reversing subsidies on certain accounts, the two issues about which Finance Minister Ishaq Dar is very much clear, but resolutely pursued his self-perceived agenda that finally pushed the dwindling economy in the turbulent Sea.
There was little hope that if coalition partners present a balanced budget for the fiscal year 2023-24, that might pave the way for the revival of the IMF’s program but the government come up with a political budget, offered a mass increase in pay and pension of government employees, announced schemes for subsidies, increase defense spending and other extravagances that proved to be the last nail in the coffin of the EFF program for the country.
Interestingly, Finance Minister Dar announced a divorce from the IMF ahead of the annual budget but Prime Minister Shehbaz vowed to fulfill all requirements and expressed optimism about the revival of the IMF program during his recent media interaction a week ago, which was surely a lack of knowledge or misinformation feed by the Finance Ministry to the Chief Executive of the Country. Meanwhile, the government was preparing to follow plan B amid the likely scenario of failing to get the IMF deal done. After having successfully sabotaged the IMF program, the Dar led economic team of the coalition government was preparing a plan of foreign investment and billions of dollars in loans from friendly nations such as China, KSA, UAE, and other Gulf states to rescue the national economy and repay foreign debt without assistance from the IMF. Recently, the coalition government announced a so-called Economic Revival Plan during a high-level meeting chaired by the Prime Minister. The Army Chief was among the participants and assured wholehearted support to the government to achieve economic stability and enhance export-oriented growth in the country.
Realistically, keeping the military on board in economic and financial issues has no significance other than a political stunt, as the military can only adopt austerity measures but could not cease/ cap the defense budget in the presence of a staunch enemy and evolving geostrategic conditions in the region and beyond. During a heightened risk of imminent economic default, the leaders’ preferred to boost their politics at the cost of the national economy and presented an imaginary budget without taking essentially needed economic reforms, taxation, and trade measures. Resisting serious economic measures and preparing strategies to initiate a begging campaign for foreign loans/ grants is no tact of the leaders and economists of any nation. The coalition government is considering void measures to attract foreign investment, and industrial growth without settling down energy issues, high production costs, trade and tariff issues, and low share in bilateral trade with other nations.
Historically, Pakistan had always been betrayed by its leaders who traded national interests for their ego, personal benefit, and public rating. The coalition government has missed an important opportunity to set the national economy on a sustainable growth track, by not honoring commitment to the global community which not only shattered the belief of the Pakistani nation in their leadership but badly tarnished the country’s image at the international level. Our neighbors including Iran, India, and Bangla Desh are doing miracles in the field of IT, Science, and technology but our talented youths are fleeing the nation in a state of utter disappointment and uncertainty. The Pakistani government is unable to tax the rich but it is compelled to extend subsidies to the well-off segments of the society. Presently, decades-long businesses, industries, media houses, and newspapers face serious financial challenges and are rapidly closing down because of massive taxation, price hikes, shortage of energy, and no payment of dues by the government. Humiliation, disrespect, and collapse are the ultimate destinations of such nations. Currently, our government is aiming in the air to make a miracle out of daydreams, and political narrative otherwise they have ruined the economy and placed real economic mines for their successors and coming generations in the country.
