Addicted to IMF bailouts since 1958, Pak ‘unwillingly’ accepts agency’s terms

By Yashwant Raj

Washington, Feb 26 (SocialNews.XYZ) Pakistan has had more than 20 bailouts from the International Monetary Fund (IMF), and is reportedly preparing to seek another one, even as it has still to receive the last tranche from the bailout programme currently underway.

That's roughly a bailout every 3.5 years since independence.

This might not be a sign of failed state or economy, but it's surely a resume crying for a reserved spot outside the IMF headquarters on 19th Street, NW Washington D.C., for a Pakistani representative with a hat and a bowl.

Pakistani officials have just announced that they have accepted -- unwillingly -- all the conditions set by the IMF to access the remaining $1 billion of the $6.5 billion of the bailout package cleared in 2019.

"We have to accept, unwillingly, the strict conditions for the IMF deal," Prime Minister Shehbaz Sharif said on Friday.

Sharif did not have a choice. His country's foreign reserve has dipped to $3 billion, which is just enough for Pakistan to see through the next three weeks.

Its long-time lenders in West Asia, whose generosity Islamabad had come to rely on, also let it be known that their money was also tied to Pakistan's agreement to the policy conditions laid out by the IMF for it to release the last tranche.

China, which already accounts for 30% of Pakistan's external debt, has extended a loan of $700 million to enable Islamabad to pay some of that same external debt. But it's really the pusher passing a free hit to an addict to keep them hooked.

Pakistan and IMF officials had been in negotiations since early February. A team of IMF officials was in Islamabad. The team left for Washington without a deal.

"Considerable progress was made during the mission on policy measures to address domestic and external imbalances," the fund said in a statement. And it went on to spell out its conditions that had not been met until then.

"Key priorities include strengthening the fiscal position with permanent revenue measures and reduction in un-targeted subsidies, while scaling up social protection to help the most vulnerable and those affected by the floods; allowing the exchange rate to be market determined to gradually eliminate the foreign exchange shortage; and enhancing energy provision by preventing further accumulation of circular debt and ensuring the viability of the energy sector."

In short, the IMF wants Pakistan to withdraw fuel subsidies and let the burden of rising prices fall directly on consumers, removal of other subsidies and raising taxes.

That remaining $1 billion will be released when the two sides sign the agreement, which should be a mere formality now that the Sharif government has relented.

Pakistan may need another bailout package to climb out of the ongoing economic mess and there are reports a fresh request is on the way. The IMF did not respond to an email asking if Pakistan had made such a request.

Pakistan has had 22 IMF bailout starting with $25 million in December 1958, two months after the country saw its first military coup, by General Ayub Khan. And then the rest.

Source: IANS