Is IMF the only option for Pakistan?

“Pakistan has no option but to revive and implement the IMF programme”

Muhammad Zubair, PML-N Leader

Sticking to the International Monetary Fund (IMF) plan is not just for getting a tranche of an already-agreed loan from the global lending agency; it is also a prerequisite for improving our financial rating. Global financial institutions or friendly states will never give money to a country with a question mark over its ability to repay.

As such, we need to pass the IMF test to show the stability of our economy and let the outside world know that we can repay the borrowed money. It is also necessary for encouraging foreign direct investment, the issuance of any foreign currency bonds, and getting loans and grants from global commercial banks and friendly states.

Yes, implementing the IMF plan is really tough for a political government. We have no choice but to implement measures to improve tax collection and make unpopular decisions such as raising the petroleum levy and raising electricity and gas tariffs. Prime Minister Shehbaz Sharif has reiterated the government’s commitment to continuing the IMF programme. Finance Minister Ishaq Dar has also held a meeting with IMF officials through a video link, and both sides have agreed to convene a staff-level meeting for devising a future course of action.

I cannot give a date right now, but hopefully the IMF team will arrive soon for a review, which will pave the way for the finalisation of the plan. At present, there is not an issue of default as we are fulfilling our external debt obligations as per the schedule. Pakistan has recently made payments to a Dubai-based commercial bank and against foreign currency bonds. Yes, the situation is really difficult, as we are facing problems in the import of raw materials and other inputs due to the foreign currency crisis.

Our foreign exchange reserves have fallen to their historical low of $4.5 billion. A revival of the IMF programme will help the country come out of the prevailing economic crisis. I am quite optimistic about the normalisation of the economic situation during the current quarter if everything goes according to plan.

“The IMF has put our strategic assets, foreign policy and national integrity at risk”

Amirul Azeem, JI Leader

Going to the International Monetary Fund (IMF) was never a good option, and we should avoid doing this right now. The IMF is a snare that has put our strategic assets, foreign policy, politics, and national integrity at risk.

The IMF and western countries’ slavery is also responsible for regime change, participation in the US-led war on terror, and the imprisonment of Jamat-ud-Dawa Chief Hafiz Muhammad Saeed. World powers are dictating our civil and military decisions, pushing the Kashmir issue aside and recognising Indian hegemony in the region.

It is the right time to say goodbye to the IMF and devise our own strategy for coming out of the prevailing crisis. Progress on the western pattern is just an illusion. We should realise our strengths and take bold decisions for the sustainable growth and progress of the country.

Pakistan witnessed the industrial revolution during the 60’s which was later damaged due to the wrong policy of nationalisation. If we made progress in the 1960s, we should be able to do so more easily in the age of technology transfer. Rulers should reduce unnecessary spending on lavish lifestyles and protocol.

Rulers should set examples, and people will follow suit, which will ultimately pave the way for simplicity and self-reliance. It will hurt the elite class, which is just two percent of the population, and benefit the whole nation. Confiscate big bungalows and luxury vehicles, and you will see gradual improvement within a short span of six months.

Practically, Pakistan defaulted about one year ago. We have no dollars to open letters of credit, even for the import of raw materials for the manufacturing sector. Many industries have shut down, and more are on the verge of closure due to the unavailability of inputs. Pakistan will not declare default, as it is against the interests of the western powers.

They don’t want to eliminate Pakistan but make her a slave through the IMF and loans for controlling strategic assets. The US desired the implementation of a new world order that ensured the supremacy of the west on the globe and the hegemony of India in the region.

“Revival of the IMF programme is necessary but not sufficient”

Muzammal Aslam, PTI Leader

The economy was never a focus of this coalition government. Their only agenda was clipping the wings of the National Accountability Bureau (NAB) and disposing of their corruption cases.

They don’t know how to manage economic affairs. They are concerned with building roads, bridges, and other projects that could be seen on the ground and fetch money through kickbacks. The coalition government inherited a much better economy than the previous regime.

The outbreak of COVID-19 made it really tough for the Pakistan Tehreek-i-Insaf-led government to manage the commodity super cycle. Despite huge challenges, the previous regime saved the economy, businesses, and public health. Now, within months, the present regime has brought the economy to a standstill. Foreign exchange reserves are at their historical lowest level, and now we don’t have dollars to open letters of credit.

The coalition government has isolated Pakistan on the external and economic fronts. The rulers are now between the devil and the deep sea. They cannot do anything but look towards the IMF for a bailout package. At the same time, they fear a further drop in the already low level of public popularity. As a result, indecision due to fear of public backlash in the next election and competing priorities is impeding IMF programme implementation. It is incorrect for the IMF to impose strict conditions on its own. It seeks a plan for increasing tax revenue to the required level and the source of funding for different initiatives.

The present regime is interested in getting an IMF tranche and then loans from friendly states but lacks the capacity and will to fulfil the conditions like reducing expenses and energy circular debt and increasing gas and electricity tariffs. Continued borrowing without a plan for long-term economic growth will only add to the debt burden. This is not in the interest of the country. Usually, the countries borrow money, but their capacity to repay also increases.

In Pakistan, however, the situation is quite different. Our debt burden is increasing, and at the same time, the economy is shrinking. More loans are required to pay off existing debts and to cover markup. As such, the way forward is to go to the IMF, give a clear and doable action plan for sustainable economic growth, and implement all the conditions in letter and spirit.