Shehbaz Sharif Taking Pakistan Further Away From Reconciliation With IMF – OpEd
It may be said without mincing words and unequivocally that the latest decision of Prime Minister Shehbaz Sharif not to increase electricity and gas tariffs and prices of petroleum products has pushed Pakistan further away from reconciliation with International Monetary Fund (IMF).
He was required to approve the increases, as a preamble to the commencement of negotiations between IMF and Pakistan. On the contrary he not only didn’t approve the increase, but announced a plan to pay Rs224 billion subsidies for four months spanning March-June 2022, without giving any clue as to how this additional amount will be mobilized.
As Sri Lanka started moving towards eminent default, many experts in Pakistan also started ringing bells that the country could also meet the same fate. At present Pakistan has foreign exchange reserves barely enough to meet six-week import. In case neither IMF nor any other friendly country extend the helping hand, default looks certain.
To add to the knowledge, a ‘fitness certificate from IMF’ is a must and without it no multilateral institution will be ready to extend fund. It is on record that Saudi Arabia has also said categorically that first Pakistan has to ‘normalize’ relations with IMF and only then it will give the promised dollars.
It is necessary to reiterate that IMF has promised: 1) to extend the tenure of the current program for another two years and 2) to raise the amount to US$8 billion, from US$6 billion. Now it is for Pakistan to agree on the terms and conditions and also to meet the agreed targets.
The consultations have been scheduled for May 18, 2022 and Pakistan was required to increase electricity and gas tariffs and raise petroleum prices. To be honest the incumbent government has not only failed in meeting the pre-requisite but also providing a time line for meeting these.
Imran Khan’s opponents have already started saying that he is responsible for the current mess. However, they tend to forget that by moving a non-confidence move against Khan and accepting the offices, they have accepted the challenge to put the economy on track.
To conclude please allow me to say that the incumbent Prime Minister and his team of economic advisors have failed in the first test. Even the bigger challenge is presentation of federal budget for the next financial year.
They have two options: 1) please IMF and remain in power or 2) go for the early elections. Ironically they can’t exercise either of the option because they will lose the support of masses and will not be able to get simple majority in the next election, what to talk of attaining 2/3 majority.