For the sake of IMF dollars

The finance minister of a cash-strapped country appears to lessen sufferings of a common man

Whether Pakistan will manage to avail an IMF bailout programme is no guessing game. It definitely will, as it has 18 times in the past. But at what cost will determine how good the government’s Asad Umar-led economic team is at managing things at the negotiating table. While an official word as to the conditionalities that the Fund is demanding against providing a bailout evades specifics, what has leaked out of the closed doors behind which the two sides concluded the first round of talks on Tuesday signals that the common man is in for further belt-tightening.

The IMF wish list is fairly long, sources say. The foremost demand that is sure to sap the already hard-up masses is the raise in revenue target to Rs4.75 trillion for the current year as against the existing Rs4.39 trillion — meaning a raise of Rs360 billion additional revenue in the remaining seven months of the ongoing fiscal year. Besides, for the elimination of power sector circular debt currently standing at Rs1.2 trillion, the Fund insists on a further raise in power tariff. The IMF also ‘suggests’ a market-based floating exchange rate and an independent central bank.

Among other demands, disclosure of the Chinese ‘loans and investment’ details to the Fund is no sticking point for Umar even though it may mean rescheduling of the CPEC loans. Umar is sure of complete transparency in the Chinese assistance, and appears to have no qualms about sharing its details with the IMF. The fiscal federalism arrangement is another cause for concern for the IMF, which believes that all profitable taxes have been transferred to the provinces and all necessary expenditures of provincial nature kept as federal responsibility. It is in this context that the IMF wants the provinces to finance the Benazir Income Support Programme — currently costing the Centre Rs150 billion a year — and take the responsibility of mainstreaming the tribal region.

Umar, the finance minister of a cash-strapped country, is understood to have only tried to reduce the gap with the position that the Fund has taken i.e. to lessen the sufferings of the common man from an approaching tsunami of inflation in the wake of an IMF bailout programme.

Published in The Express Tribune, November 21^st, 2018.

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