After $6.6 billion and a set of structural reforms that otherwise were very likely not to be implemented if it wasn’t for the accountability that comes with a bailout package, Finance Minister Ishaq Dar has declared that the country no longer needs the IMF’s financial support. His statement, although technically correct for the time being, drew a sharp response from certain quarters, which were of the opinion that the over-optimistic financial czar should not rule out the possibility of the country needing future bailouts. Their pessimism stems from Pakistan’s ever-falling exports — owing to several reasons ranging from a global economic slowdown to the country’s own competency issues — and an import bill that maintains pressure on remittances. With foreign exchange reserves due to take a hit once repayments to international lenders kick in, the pessimism is not unfounded.
However, Mr Dar’s statement should not be considered in a vacuum. He was quick to point out that “economic gains of the past two and a half years” need to be consolidated. Falling oil prices and increasing tax rates have helped address the country’s single-most pressing issue — low tax revenues. But economic growth is still not at the required level, putting pressure on the country’s fiscal side. While core stability has been achieved, privatisation of state-owned entities continue to be a challenge. The IMF bailouts help the country, which in turn provides packages to loss-making public-sector companies. This cycle will not end unless the end-part of the chain is fixed. The IMF director has already stated that all political parties need to form a consensus on the national economic agenda. Consistently agitating against literally every move the government makes to enhance economic growth is not the answer. A democratic polity should ideally allow for intelligent debate, which takes into account all aspects before arriving at a well-conceived, long-term solution to problems that is stuck to even when the government changes. This is something found lacking in Pakistan. The privatisation issue remains the key challenge for the country and has the potential to cause much division, while having huge implications on the budget. Unless this dilemma is resolved, Pakistan’s reliance on bailout packages cannot be ruled out.
Published in The Express Tribune, April 11th, 2016.
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