Harder times ahead

IMF is unsatisfied with the recent mini-budget and proposals for the fiscal deficit

Winning the election was the easy bit. Running the country — or perhaps rescuing the country — is considerably more difficult. There is a basket of crises; some of them relatively slow burn like water, others like the economy needing emergency-style attention. The IMF team is in town for what was being trailed by the government as a routine visit post to the completion of a programme but is beginning to look more like the overture to another IMF application and there are already hard words. The government is being asked to raise more revenues and to pay greater attention to outstanding ‘structural reforms’ — both of which are going to entail political pain. With by-elections a fortnight away that is not what the government wanted to hear.

Reports say that the IMF is unsatisfied with the recent mini-budget and that the proposed measures were insufficient to keep the fiscal deficit within the target of 5.1 per cent. Ideally, for the PTI government they would like to push the begging-bowl moment beyond their first 100 days in office, but the chances for that are slim and getting slimmer. International oil prices are rising and shifts in the global economy bode ill for Pakistan. Internally there is much reliance on engagement ‘with friends’ (read Saudi Arabia and possibly even China) to provide the wiggle room. As things stand there is little confidence coming from the potential inwards investors and the albatross of debt servicing that is the legacy of previous governments leave the incomers hamstrung and with few real choices. Or solutions.

The IMF team wraps up on October 4 and the government is stonewalling saying that “at the moment there is no plan to approach the IMF” but it is inconceivable the respective teams did not have the ‘what if…’ discussions. There is still no word on what is to be done about or with the Pakistan Steel or PIA, both of which are bleeding out, as are other state-owned enterprises. Chickens have come home to roost. Mr Fox awaits them.

Published in The Express Tribune, October 3^rd, 2018.

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