No space for complacency
The IMF package alone will not reduce Pakistan’s economic woes. With China and the UAE having made no open commitment of a hefty financial package, the crunch would only partially improve with an IMF package which still remains uncertain in view of the gaps in positions taken by Asad Umar and the Fund’s delegation.
The PTI administration faces a dilemma. It is keen to get a bailout but is unwilling to accept some of the tough conditionalities. With an eye on a jittery bourse and a rupee in free fall, the finance minister would not like to create the perception that talks are not proceeding well. His assurance that the dialogue is moving in the right direction is a bit too optimistic.
The IMF insists on an end to subsidies over power and handing over the authority to fix tariff to the power regulator. It wants an upward revision in the revenue target to Rs4.75 trillion for the current year while it is not possible for the government to exceed the limit of Rs4.5 trillion. The IMF is opposed to fiscal federalism which is a part of the country’s constitution. The PTI doesn’t have the numerical strength to change the 18th amendment even if it wants to.
Like the PML-N which did not devalue the rupee out of a false sense of national prestige, the PTI is unwilling to privatise the PIA, Railways and Pakistan Steel Mills for equally fake considerations despite the fact that they continue to bleed the national economy.
If there is complete transparency in the Chinese assistance, as claimed by finance minister, what stands in the way of sharing the details with IMF? One had expected that Asad Umar would succeed in seeking a gradual escalation in power rates and a measured approach towards bringing millions of traders and well-to-do tax dodgers into the tax net. Putting all the weight on the common man immediately and forcing the large trading community to cough up instantly is likely to generate a crisis that is in nobody’s interest. The finance minister has obviously failed to convince the IMF of the negative impact of disregarding politically sensitive issues.