Though Pakistan has not “officially” approached the International Monetary Find (IMF), the process for negotiating a bailout has begun for all intents and purposes. The recent visit of IMF’s delegation led by Harald Finger, the organisation’s mission chief for Pakistan, has already indicated what would be required of Pakistan, as well as its estimation of the new government’s economic policy to meet the financing requirement of $75 billion over next three years.
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According to the delegation, while beneficial and necessary on their own, increasing exports will not solve the balance of payments issue in a challenging and changing foreign market environment, and a reliance on “friends” to shore up the deficit is not a sustainable method either. Pakistan unfortunately, has always relied on ad hoc methods to find a cure for its economic problems, and reliance on ad-hocism has never proved a long lasting solution.
IMF’s advise to the government to keep the rising oil process in the international market into consideration should not be ignored. It will further worsen the already protracted economic situation of the country. The crux of the problem, according to IMF, is the inability to collect tax revenue, bills for utilities and services, and the many loss-making public enterprises.
Moreover, IMF is not alone in making such a suggestion. Many local experts believe it too that more focus on these issues will help Pakistan significantly in overcoming the problem of fiscal deficit. Robust internal reforms are needed if Pakistan wants it economy capable of absorbing the shocks in the international market.
Perhaps, the government will not have to go for a bailout, but the government should already be looking to deal with these issues on a priority basis. PTI’s budget proposal was disappointing in the sense that it reversed some of the necessary steps taken by the previous government; concessions offered to non-filers. The government is yet to take a firm stance on the extremely challenging task of divesting bodies like Pakistan International Airlines (PIA) and Pakistan Steel Mills to name a few.
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However, this is not the first time that Pakistan has entered into talks with IMF. Every time Pakistan seeks help from the international body, the organisation stresses Pakistan to act upon what has been said to it in the recent meeting. Despite showing compliance and making improvements in revenue collections, Pakistan’s economy has never recovered fully.
The government needs to go beyond the suggestions of the body. It is high time that the government starts formulating a firm policy on these issues. Avoiding or running away from taking hard decisions will not divert the looming full-blown fiscal crisis.
Source : https://nation.com.pk/03-Oct-2018/talks-with-imf-team