Another tranche

A new tranche of $1.2 billion has been approved by IMF in what proves that the global lender has found Pakistan complying with the terms and conditions of its bailout package. The government has promised adherence to pre-war programme targets to keep its economic stabilisation efforts on track, irrespective of its policies adding to unemployment, poverty and income inequality in the country. Of the new tranche, $1 billion will cater to the balance of payments situation, while $200 million will go to budgetary support.

With this new disbursement, Pakistan has so far received loan worth $4.5 billion against two separate debt packages totaling $8.4 billion. The conditionalities that the IMF wants fulfilled include: approval of the new budget by the National Assembly in line with the its directives to, for instance, amend laws governing the special economic and technology zones; offsetting the impact of revenue shortfall; increasing the petroleum development levy; and adjusting the electricity and gas prices on a regular basis to maintain a progressive tariff structure.

The Fund's nod came after a careful review as it acknowledged the government's efforts in meeting monetary targets. There were, nonetheless, some reservations too, as the US-Iran conflict has impacted fiscal statistics during the second half of the ongoing fiscal year. Some leap forward was also noticed on structural reforms, especially in areas of governance, social support, gas sector sustainability and special technology zones.

On whether this can turn out to be the last IMF programme, as asserted by the rulers, let that be noted that a host of factors threaten to overshadow macroeconomic stability, such as a projected low economic growth due to missing agrarian and industrial targets; a slump in exports as our products remain largely uncompetitive owing to high energy costs; and a rise in imports. Moreover, a cut in remittances as regional upheavals go on to impact the economic prospects of expatriates will be toiling. A dismal performance in upholding austerity claims is also there to derail the path of recovery.