IMF bailout delay

Talks with the IMF have apparently hit snags. The Fund, in a surprise move, removed Pakistan from the agenda of its August 30 meeting which was supposed to approve a $7 billion bailout package under the new understanding of structural reforms. This has come as a rude shock and torpedoed the plan of action to keep the wheel of the economy moving. With chips down in terms of exports and production, amid an escalating energy cost, it has become an uphill task for the country, under a huge obligation of debt-servicing, to stay afloat. Though little is known on what happens to be the spanner in the works, the delay is sure to do with the weak homework on the part of financial wizards in Islamabad who were too confident of a month-end deal, but are now keeping their fingers crossed.

Pakistan is already walking a tightrope as its plan to reschedule loans with the Chinese entrepreneurs is taking a long route. Likewise, the desire to seek a rollover of sitting liabilities with the Middle Eastern friends is also on a rollercoaster. And this inability of Islamabad to procure a firm understanding of $12 billion seems to have provided the IMF with the excuse to delay the hard-earned understanding for more loans. That means with a critical debt-repayment obligation of more than $26 billion looming large, the new delay is likely to rupture sovereign deals as well as commitments with the lenders. And with the economy shrinking below a 2% growth rate and the rupee barely holding up around 280 a dollar, pushing bourses in a jittery zone, the situation is highly depressing.

With no new date formally set for the IMF Board meeting on Pakistan's fate, it is going to be tough to make ends meet. Realpolitik has already pitched Pakistan between China and the US, and the deteriorating economy along with a new wave of terrorism is making it worse. The ongoing altercation with IPPs and soaring energy prices have shrunk the purchasing power of the common man. With no more room for agreeing on stringent reforms, in an already squeezed economy, it's time to think afresh beyond the IMF.