Risky business

Decision to rely on IMF may have been the only viable cure to Pakistan’s economic ailments

Asad Umar may have thought he would win his party and his leader some points from the masses. Inadvertently, however, he might have just added to public confusion over his government’s economic decisions.

Recently, the former finance minister revealed that he had provided Prime Minister Imran Khan an alternative to going the International Monetary Fund for another bailout. “I told him that going to the IMF was now a choice as opposed to a compulsion,” he said. The choice had been created because of the premier’s goodwill in the global market and a mutually reinforcing relationship between the military and the civil government, he explained.

What was Umar’s alternative plan? The former finance minister wanted to use the aforementioned factors and the Pakistan military’s good relations with Gulf countries to raise funds from the global capital markets and commercial banks and apply a combination of tariff and non-tariff barriers and gradual currency depreciation.

Naturally, the plan was a risky one, something Umar himself admitted. And ultimately, the prime minister decided to opt against “because every single expert agreed that we must go to the IMF,” he said.

Whether Umar’s strategy would have worked is something we may never find out, but a cursory glance at its supposed features does suggest it relies a little too much on the goodwill of Pakistan’s ‘friends’. In all likelihood, the decision to rely on the IMF, as unpalatable as it has been, may have been the only viable cure to Pakistan’s economic ailments.

Still, given how unpopular the conditions of the IMF bailout, particularly the rupee’s slide against the dollar, have been, Umar’s move to draw attention to an alternative does appear questionable. Umar may have wanted to highlight the premier’s pragmatism, something critics often accuse him of lacking, but whether the public sees it that way is far from guaranteed.

Published in The Express Tribune, July 28^th, 2019.

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