The government’s failure to persuade the IMF to continue its current programme must be taken as a signal that the country will have to manage without the IMF for the foreseeable future. That the deal is dead is not simply because Pakistan is unable to pass the present review, it is because the government is already behaving as if there is going to be no deal. Clearly, it knows something. Part of this has been the IMF’s alacrity at shifting the goalposts, at imposing new conditions whenever the old ones were met. However, that has been more because the IMF is trying to persuade Pakistan to obey non-economic dictates of the USA, rather than for the economic reasons the IMF claims it has been following. Pakistan’s purchase of discounted Russian crude is only one of its transgressions; another has been its striking a deal with Azerbaijan for LNG instead of Qatar. At the same time, the barter agreement with Iran and Russia has also not gone down well with the USA or the IMF. Pakistan’’s own shortage of foreign exchange has made it inclined to any move that reduces its dependence on the US dollar. At a time when the US dollar is facing criticism, its attempt may be seen in some circles as a betrayal. Pakistan, though, is obliged by its own difficulties, as well as by the possibility of the USA heading to a default of its own, something it only just averted thtough a bipartisan congressional deal on its debt ceiling.
This has led to the fateful decision to move into uncharted waters. Perhaps the most important matter that faces Pakistan is that the era of unlimited borrowing is over, and now it is only through fiscal responsibility that the government can control what has so far been an inexhaustible appetite for foreign exchange. It is also essential at this time, through astute and shrewd diplomacy, to persuade friendly countries, like Saudi Arabia and the UAE, and China, of the need to resist US and IMF pressure, and help Pakistan survive its time of need. The foremost priority must be to avoid a default. Apart from that, the government must also take whatever action is necessary to achieve political stability, which has moved from something desirable to an essential for economic survival, not just prosperity.
