DAWN Editorials – 26th Dec 2022

IMF negotiations

WITH the country’s foreign exchange reserves depleting to dangerous levels, all eyes are on the government to see how its negotiations with the IMF pan out. Friday’s pages carried a concerning report on the State Bank’s forex holdings, which stood at just $6.1bn after the week that ended Dec 16.

The central bank cited continuing repayments of external debt as the reason behind the sustained decline in its forex reserves. Those repayments are likely to get more and more difficult without new inflows, which is why satisfying the IMF and securing another tranche from the ongoing bailout programme has become so critical for maintaining the economy’s health.

It is worth recalling that the ninth review of the IMF’s bailout programme had earlier been put off for two months due to the PML-N-led government’s unwillingness to accept certain conditions placed before it by the Fund, and the disagreements have yet to be resolved.

Apparently, instead of acknowledging the ground realities and taking action accordingly, the people tasked with managing the country’s finances expended that time pleading with friendly countries to roll over maturing loans, make fresh deposits and provide some concessions, such as deferred oil payments.

However, while those friends have made assurances, the needed assistance has yet to materialise, and the window for the government to take action has narrowed considerably in that period.

Reports in some sections of the local media suggest that the IMF has given Islamabad another few weeks to get its act together and make progress on the prescribed action points if it wants to clear the ninth and tenth reviews satisfactorily. Otherwise, there is little hope for the release of the held-up funds.

The imposition of about Rs800bn in new taxes, which the IMF insists Pakistan needs to do in order to keep afloat, is a key hurdle. However, Finance Minister Ishaq Dar has been resisting the requirement strongly due to the political costs it is likely to extract from the ruling coalition.

Foreign lenders are unlikely to look on Islamabad very favourably as long as the IMF remains dissatisfied with the overall direction the economy is being steered in. Given the amount of energy the ruling coalition is expending on ensuring that it stays in power till August at least, the stasis in policymaking defies logic.

Whatever the political costs of taking difficult measures, the hammering the PDM is likely to receive if the economy continues to be run aground is going to be far worse. With time rapidly running out, Mr Dar must decide whether his party’s political standing is dearer to him or the country’s economic future.

He ought to have understood by now that the PDM’s decision to keep its government was going to come with political costs, especially during a time when the country is wracked by multiple crises.

Published in Dawn, December 26th, 2022

Flood victims

REPORTS from flood-hit areas across the country paint a bleak picture that shows the suffering and vulnerability of the affected population. A UN report last week said a harsh winter lies ahead for those living in some 35 districts in the country. Alarmingly, there is stagnant water, reports of damaged shelters as well as lack of winter clothing and safe heating supplies. Not only do these factors threaten to put millions at risk of disease, they also increase the probability of gender-based violence. The study estimates that more than 14m people need food assistance, with half that number requiring immediate access to nutrition. A second report, supplemental to the Post-Disaster Needs Assessment, highlights that the shortage of food and the spread of disease, because of lack of safe drinking water and sanitation, will have a serious impact on stunting rates. The summer’s devastating floods have pushed an additional 2m households into poverty and destroyed crops and livestock that provided a source of income for hundreds of thousands of families.

The details contained in these reports regarding the scale of destruction and hardship faced by those affected by the floods are hair-raising, and must lead to greater action and support from both our authorities and the international community. After a string of natural disasters, such as the 2005 earthquake and 2010 floods, our disaster management authorities and government have a framework for the mitigation of the impact of disasters. They must review examples from the past, and draw the world’s attention to the continuing threat to the affected population. Resources must be focused on addressing humanitarian needs, security, nutrition, public health and poverty. Failing to do so would push millions more Pakistanis into desperation, which would have long-term consequences for both individuals and society at large. The flood disaster is by no means over. Though the floodwaters began to recede in September, the vulnerability of those living with inadequate protection in extreme weather is higher than ever. It is most unfortunate that the flood calamity is largely absent from the national conversation, which seems to be solely focused on politics, scandals and power games. Our leaders cannot afford to ignore those affected by this crisis. As the country hurtles from one predicament to another, a large segment of the population in the throes of extreme poverty and deprived of shelter and safety continues to wait for its fundamental rights.

Published in Dawn, December 26th, 2022

Saudi-Iran thaw

WHERE geopolitics is concerned, Saudi Arabia and Iran are poles apart. The former is a steady ally of the US, though there has been some recent turbulence in that relationship, while the latter is a staunch enemy of America. Moreover, ever since the events of 1979, both states have sought to position themselves as leaders of the Muslim world. These diverging positions have resulted in immense dissonance, as both Riyadh and Tehran have fought each other in proxy wars across the Middle East. An extension of the Saudi-Iran rivalry has also affected Pakistan, influencing Shia-Sunni relations in this country. Therefore, whatever happens between Riyadh and Tehran has an impact on the Middle East, as well as the Muslim world in general. Hence, it is welcome that the decidedly cool relations between the Saudis and Iranians have warmed up a notch, with the Iranian foreign minister saying there have been “friendly” contacts with his Saudi counterpart. Both men recently attended a conference on Iraq in Jordan, where Iran’s Hossein Amirabdollahian said Saudi Arabia’s Faisal bin Farhan assured him of his country’s willingness to continue dialogue. Both sides have already been holding talks brokered by Iraq, though there has been a months-long gap since the last time representatives met.

The Saudi-Iran talks should continue, and the peace process could move forward considerably if both re-established diplomatic ties, snapped since 2016 when Riyadh executed vocal Saudi Shia cleric Sheikh Nimr. The UAE and Kuwait, which usually work in tandem with the Saudis where Iran is concerned, have earlier this year already re-established diplomatic relations. The fact is that Saudi Arabia and Iran cannot change their status as regional neighbours, and need to work out a way of living with each other, and respecting each other’s red lines. A Saudi-Iranian détente can also bring peace to Yemen, along with helping stabilise Lebanon and Iraq, as both states exercise influence in these countries, while intra-Muslim relations will also benefit greatly from improved ties between the two.

Published in Dawn, December 26th, 2022

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