An International Monetary Fund (IMF) mission led by Mr. Nathan Porter held both in-person and virtual discussions in Doha, Qatar with the Pakistani authorities during May 18-25 on policies to secure macroeconomic stability and support sustainable growth in Pakistan. At the conclusion of the mission, Mr. Porter issued the following statement:
“The mission has held highly constructive discussions with the Pakistani authorities aimed at reaching an agreement on policies and reforms that would lead to the conclusion of the pending seventh review of the authorities’ reform program, which is supported by an IMF Extended Fund Facility arrangement. Considerable progress was made during the mission, including the need to continue to address high inflation and the elevated fiscal and current account deficits, while ensuring adequate protection for the most vulnerable.
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In this regard, the further increase in policy rates implemented on May 23 was a welcome step. On the fiscal side, there have been deviations from the policies agreed upon in the last review, partly reflecting the fuel and power subsidies announced by the authorities in February. The team emphasized the urgency of concrete policy actions, including in the context of removing fuel and energy subsidies and the FY2023 budget, to achieve program objectives.”
“The IMF team looks forward to continuing its dialogue and close engagement with Pakistan’s government on policies to ensure macroeconomic stability for the benefit of all of Pakistan’s citizens.”
The net outcome of the meeting is: Funds not released, Do more!
However, it is beyond our understanding that the fuel price was increased after the IMF meeting if it has been increased a day or earlier, the chances of success of negotiation with IMF might have been increased. Was it a deliberate attempt to fail the negotiation or a lack of confidence that could not make a decision in time? Furthermore, the increase in fuel price is partial, still a subsidy of around Rs. 20 is given, and do we have fiscal space in the budget to provide this subsidy? Are we planning to remove the full subsidy in stages? Will it satisfy the IMF requirements?
Even, if we remove the full subsidy of fuel, will the IMF be satisfied and release the next installment? What about the subsidy of Electricity and Gas, etc. Is the Government planning to remove all subsidies? Do they have the provision of funds in the budget? Is there a fiscal space? Or does the Government depends on borrowing more to extend subsidy on some items?
Has the Government agreed to share budget 202-23 with IMF before submitting it to National Assembly? Will the IMF look after public interest in Pakistan and allow a people’s friendly budget? There are many other conditions demanded by IMF, will the Government fulfill all of their demands? What will be the implication on the public, in terms of inflation, price hike, political unrest, the future of ruling parties, etc.?
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Pakistan has almost fulfilled most of the requirements of FATF, but, still, they make one or another reason to keep Pakistan on the grey list. Is not the IMF may do the similar tactics? Even, though the Government full fill most of its demands, yet, IMF may use lame excuses to delay the release of the next installment.
Looking into the history of IMF, they have not done anything good with any country
The worst victim of the IMF in Argentina, Brazil, Egypt, etc. Is Pakistan going to be on the victim’s list???
Definitely, Pakistan is in a serious economic crisis, and we need money urgently, is the IMF the ultimate choice? The rapidly changing geopolitics has forced Pakistan to strengthen its defense, which needs money. The Afghan situation, India’s aggressive policies, the impact of the Ukraine crisis, etc., have forced Pakistan to enhance its defense capabilities, which require additional funds.
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What are the options available for Pakistan? Is borrowing more the only option? Is IMF the only option? Economists, Politicians, Scholars, Intellectuals, Researchers, Establishments, Bureaucracy, and Civil and Private sectors of Pakistan, should think collectively and explore all possible options to bring Pakistan out of the economic crisis. It is time for unity and reconciliation. Political harmony and tolerance are needed at the time. It is a serious matter and a matter of survival, being serious, brave, wise and collective wisdom can bring the nation out of the crisis. Pakistan has the potential to overcome all challenges, it need only a strong will and sincere efforts. Bravo!
Prof. Engr. Zamir Ahmed Awan, Sinologist (ex-Diplomat), Editor, Analyst, Non-Resident Fellow of CCG (Center for China and Globalization). (E-mail: email@example.com). The views expressed in the article are the author’s own and do not necessarily reflect the editorial policy of Global Village Space.