Successful second review

The Government of Pakistan and the IMF have finally reached an agreement “on policies and reforms needed to complete the second review” of the $6 billion economic bailout package approved in July last year. The agreement — which is subject to approval by the Fund’s management and consideration by its Executive Board — will enable the release of $450 million worth of tranche to Pakistan sometime in April. Pakistan has already secured $1.44 billion through an upfront release of $991 million at the time of the signing of the agreement as well as the first tranche of $452 million in Dec 2019. A successful second review would take the total IMF disbursement to $1.9 billion — almost a third of the total package.

That the two sides had divergent positions on a host of conditions discussed during the second review is no secret. There were reports in the media that the IMF was insistent, as ever, that the Pakistani authorities make up for the tax shortfall whether by bringing a minibudget or by raising the utilities’ charges. On the other hand, the government — aware of the people’s economic hardships and its political cost to itself — was trying to convince the IMF into further reducing the tax target to something around Rs4.8 trillion, as against one already revised down to Rs5.23 trillion from Rs5.55 trillion. The PM is also reported to have put his foot down on not allowing any further raise in tariffs of utility services. Whether the Pakistani authorities brought the IMF team round to its stance or it was the other way round or both sides made a compromise or two to get the deal going, is not formally known. There is no official word from either side other than a statement from IMF Mission Chief for Pakistan Ernesto Ramirez Rigo that does not explain the “policies and reforms” that have been agreed upon, clearly avoiding going into the specifics in a customary diplomatic way. Are we to wait till April to know what a successful second review means to the common man? 

Published in The Express Tribune, March 1^st, 2020.

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