Prime Minister Shehbbaz Sharif’s meeting with IMF MD Kristalina Georgieva on the sidelines of the Summit for a New Global Financial Pact not only failed to make clear not only whether the IMF was going to release the held-up tranche, but what are the intentions of either lender or borrower. That means that the tension gripping Pakistan on the economic front will continue, an uncertainty afflicting investors, both old and new, who simply do not know if the IMF will continue its engagement with Pakistan, or whether Pakistan would now adopt a ‘Plan B’ to deal with a situation where it did not get IMF support. Either IMF conditionalities, or measures to deal with an IMF-less world: in either case, the investor must know because he would have to pay the new rates.
The government is understandably reluctant to bite the bullet and accept that the IMF will not go forward on the. There is a major debt servicing payment at the end of the month, for which it badly needs the held-up tranche, and if Pakistan manages to meet that payment without the programme restarting, the IMF will lose that leverage. Actually, the IMF is suspected of constantly shifting the goalposts because its real motive is not to make Pakistan reform its economy but to obey the USA. Pakistan is being asked, at this time, to abandon its ties with China, as the USA confronts it globally. However, the IMF cannot be explicit about this, because it claims to be an economic organization. Hence its placing of new conditions when previous ones are met. Pakistan seems to have realized this, which is why it reached out to a number of ambassadors in Islamabad. Of course, this should also be followed up by supplementary activity by Pakistan’s ambassadors in those countries’ capitals; whether that is happening is anyone’s guess,
The IMF should realize that its strong-arm tactics are only likely to drive Pakistan closer to China. They have already done so, as Pakistan is now actively seeking increased ties with Russia and China which will enable it to reduce dependence on the US dollar. Pakistan is now only seeking deals which will free it from the IMF. It will find its real problems will start when Pakistan finds and finalizes such deals.
