Time for optimism

Pakistan’s finance team is finally breathing easy. The International Monetary Fund agreed to provide 50% of our $12 billion shortfall over the next three years. In addition, other agencies like the Asian Development Bank and the World Bank have vowed to provide a few billion dollars in addition. Let’s rejoice momentarily as we have been provided an opportunity to keep our figurative head above the water. However, we still need to tread diligently. The six billion dollar loan from the IMF comes with many conditions. Pakistan’s economy, in tow with a brand new finance minister, will require some overhaul in terms of its policies. The IMF, ADB, World Bank, and potential investor countries will be keenly watching to see whether we comply.

Compliance with IMF terms may lay a solid ground for future investment and revival of the economy. The economics of Pakistan have been a nebulous mystery; the rich continue to grow and the poor hardly ever find means to rise above their socioeconomic status for generations to follow. Major dealings are done with black money, never mind small under-the-table transactions that never come to the government’s attention. As part of the IMF terms, state-run entities that have generated negative growth will be reviewed. This comes as a relief to many Pakistanis, who viewed the continued operations of these enterprises as stemming more from national pride than economic wisdom.

Our new financial team players seem to be more in tune with what needs to be done. The fact that Dr Reza Baqir was an IMF employee and is our newly-appointed State Bank governor fares in our interest. He is believed to be a capable man and brings a solid network of former colleagues to the table. Let’s not, however, ignore that the bailout package will only be added to the roughly $90 billion Pakistan has received in the past. The IMF may want speedy implementation of its mandated reforms in order to steer Pakistan’s growth towards a position where we will be able to repay at least a fraction of borrowed money at some point in the near future.

Published in The Express Tribune, May 14^th, 2019.

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