Pakistan’s ongoing economic crisis is not going to ease unless and until the government is able to get the IMF onboard and obtain the next tranche of the loan. As an Editorial in Dawn noted, “that Pakistan needs the IMF program now to reverse the economic downturn in the country and stay solvent cannot be overemphasized. Pakistan requires $37bn or more to finance its debt and other payments next year. As things stand, the inordinate delay in the finalization of a new staff-level agreement with the IMF has already shut down global bond markets and other sources of funding — bilateral, multilateral and commercial — for Pakistan, while the latter’s depleting foreign exchange stock is playing havoc with the exchange rate as the rupee dropped to 210 to a dollar.”
While the coalition government has made a few tough decisions such as raising fuel and power prices “it has failed to convince the Fund on its next fiscal year’s budget, mainly regarding its exaggerated revenues and understated expenditure estimates that make the achievement of the targeted primary surplus (or the savings from its revenues after meeting all its expenses excluding the interest payments for the year) of Rs152bn suspect. The government must get its budget passed by parliament before or on June 28 to legally ensure its implementation from July 1 as required under the Constitution. This requires the government to reach a final agreement with the IMF at the earliest so that it can protect the agreed measures in its updated budget and show the expected financing from the IMF in the documents.”
The Editorial appealed to both the government of Pakistan “to rethink its budget to show to the international creditors that it has what it takes to put its fiscal house in order” and to the IMF that “continuing delay in signing the deal will only make the economy unmanageable.”
