A new shape emerges
Days before the new prime minister is sworn in, pit is already evident that the winds of change are picking up
Days before the new prime minister is sworn in, parliament reconvened and the new government goes about its business it is already evident that the winds of change are picking up. With the financial crisis at the top of the to-do list and the possibility of an approach to the IMF as early as September there are moves to take up alternatives. The Saudi-backed Islamic Development Bank (IsDB) is in the frame to lend Pakistan $4 billion to alleviate the foreign currency shortfall. Approval of the loan will have to wait until the new government is sworn in but the presumptive finance minister, Asad Umar, will reportedly accept it.
Welcome as it is, it is not going to plug the yawning deficit of $25 billion in the current fiscal. The stark reality is that Pakistan is to all intents and purposes bankrupt. There is about $10 billion in the central bank reserves and $8-9 billion in short-term liabilities which reduces forex to something close to loose change. There are strings attached to any IMF loan, and Chinese loans associated with CPEC all need servicing. The big banks are unwilling to lend because the government can only pay off interest and not the principal. Fast footwork clearly needed.
Meanwhile, over the diplomatic horizon, fast approaching is the matter of politically-appointed ambassadors, several of them from the tail end of the last dispensation. Protocol demands that non-career politically-appointed ambassadors vacate their posts at the change of governance — some have and some have not. There are 21 ‘politicals’ — two of them of considerable interest. One is the Pakistan ambassador in Ottawa whose position is ambiguous given the government support for the Saudi government over the sovereignty spat, and the other is the ambassador to Washington who presented his credentials after the PML-N government left. Both are sensitive posts at the forefront of current diplomatic activity. Replacing either or both with candidates of sufficient heft is going to be difficult. Money and diplomacy — the incomers are going to be carrying a lot of luggage as they hit the ground. Running? Possibly not. But a brisk trot is advisable.
Published in The Express Tribune, August 11th, 2018.
Welcome as it is, it is not going to plug the yawning deficit of $25 billion in the current fiscal. The stark reality is that Pakistan is to all intents and purposes bankrupt. There is about $10 billion in the central bank reserves and $8-9 billion in short-term liabilities which reduces forex to something close to loose change. There are strings attached to any IMF loan, and Chinese loans associated with CPEC all need servicing. The big banks are unwilling to lend because the government can only pay off interest and not the principal. Fast footwork clearly needed.
Meanwhile, over the diplomatic horizon, fast approaching is the matter of politically-appointed ambassadors, several of them from the tail end of the last dispensation. Protocol demands that non-career politically-appointed ambassadors vacate their posts at the change of governance — some have and some have not. There are 21 ‘politicals’ — two of them of considerable interest. One is the Pakistan ambassador in Ottawa whose position is ambiguous given the government support for the Saudi government over the sovereignty spat, and the other is the ambassador to Washington who presented his credentials after the PML-N government left. Both are sensitive posts at the forefront of current diplomatic activity. Replacing either or both with candidates of sufficient heft is going to be difficult. Money and diplomacy — the incomers are going to be carrying a lot of luggage as they hit the ground. Running? Possibly not. But a brisk trot is advisable.
Published in The Express Tribune, August 11th, 2018.