While the negotiations with the International Monetary Fund are not over, the departure of PM’s Finance Adviser Shaukat Tarin, not just from the talks, but from the USA itself, cannot be construed as a good sign. While the foot soldiers of the Pakistan delegation will continue to dicker, the departure of their lead negotiator means that their chances of achieving their goal, the revival of the IMF Extended Structural Adjustment Facility of $3.3 billion, are infinitesimal. The IMF is not ready to relax its conditionalities for reviving the package. Much has been riding on a revival. The Pakistan Stock Exchange earlier went up after news that there was a staff-level agreement in the offing.
There is much riding on the IMF programme. At the time of the approval of the programme, it was made clear to Pakistan that being moved onto the Financial Action Task Force’s black list would result in the programme being suspended. Pakistan being kept on the FATF grey list obviously did not go down well with the IMF. There have been other hurdles, however, one of which was the IMF’s demand that taxation be increased, and another being the power tariff increase demanded for ending the circular debt problem in the power sector.
It would be wrong to throw the blame on Mr Tarin, who was after all the government’s fourth Finance Minister, but the fact remains that he too was unable to introduce the kind of reforms that the IMF has long pressed, and which have been resisted by powerful lobbies. His inability was probably not because of any inability on his part, but because the head of the PTI government was unwilling to take the necessary tough decisions. The IMF programme had been a centerpiece of the government’s programme, and any failure to revive it will mean that the measures taken to obtain, and policies meant to revive it, such as the recent power tariff hike and rupee devaluation, have all gone in vain. Other avenues, such as friendly countries, are all a little up in the air at the moment.
