‘Challenging Economic Juncture’ | Editorial
The International Monetary Fund (IMF) very rightly noted that Pakistan was at a “challenging economic juncture” as it finally confirmed late on Thursday that it had reached a staff level agreement (SLA) with the government on the combined seventh and eighth reviews for the stalled $6 billion bailout program; formally known as the Extended Fund Facility (EFF). Appreciated as this development is, it must still be pointed out that the Fund did not ask for any more “prior conditions” since its interaction with Finance Minister Miftah Ismail a couple of weeks ago, so it had what it needed to decide at that time. And that it still took so long, even as financial markets here tumbled because of all the uncertainty, only goes to show that it was being unfair by deliberately traumatizing Pakistan’s economy for no reason at all.
The agreement is still subject to approval by IMF’s executive board, of course, but this is a mere formality and markets are reacting as such. It would be interesting to note, going forward, how the Fund responds to the request to extend the EFF till end-June 2023, and also increase its size to about $7 billion. The $1.17 billion that will now find its way to the state bank’s vaults will not just ease the reserves position directly, it will also enable borrowing from other bi- and multi-lateral institutions, which is why the rupee is already beginning to find its footing after a very long time.
This milestone must also make everyone realise and understand the cost of fiddling with a bailout program midway like the previous PTI administration did as the no-confidence noose tightened around its neck. The country had already met the prior conditions for the 7th tranche, but once the program was suspended and the balance of payments suffered, the Fund naturally asked for another pound of flesh to get things back on track. Hopefully, such mistakes, which make people pay through their nose at the end of the day, will not be repeated.
Still, while this does count as a success, it’s not something to celebrate. It just means that we’re good enough to borrow more money for a little more time; till yet another pound of flesh is required to feed our addiction to debt.
‘Challenging Economic Juncture’ | Editorial
Source: https://dailytimes.com.pk/966510/challenging-economic-juncture/