Fate of the IMF program


Even after all the trouble the government has gone to accommodate IMF’s demands-practically unravelling the ongoing fiscal’s expansionary budget-there’s still no telling when, or even if, the Extended Fund Facility (EFF) is going to be revived. The centre clearly thought it was more or less in the bag, and went ahead with blaming the previous administration for the present one’s desperate need to get more loans to deflect all the criticism, but then the Fund made it mandatory to pass the so-called mini-budget and SBP amendment bill through parliament; failing which would mean no greenlight.
This is where, quite expectedly, a new Pandora’s box has fresh problems have arisen. For one thing, the opposition isn’t going to have any of it. After all, why would any opposition party willingly waste the opportunity to attack a sitting government, especially when it can claim to be moved by the people’s suffering? A bigger red flag has come in the form of the coalition partners, raising some stiff questions. This considerably complicates the position of the treasury benches. MQM leaders reminded PTI, that too in the House, that being partners in government in no way meant that their role was be limited to voting in its favour whenever it so demanded; and also lamented that the contents of the mini-budget were not shared with them. They’ve objected to 11 clauses in the bill, including the imposition of taxes on food items, cottage industry, solar panels, hospital machinery, etc, and advised PTI to reconsider its position or prepare to face the “revenge of the masses.” GDA, too, is worried about new taxes on agriculture input items, which could make food more expensive.
These are very serious issues and the government does not have the time to cajole both coalition partners and the opposition. It wouldn’t be a smart idea to try and force these bills through the house either, as they did with electronic voting machines, because there’s no assurance that allies will play along this time and also because opposition parties have threatened severe protests, in and out of parliament. Getting any more time from the Fund is also not very likely because even the short extension from mid-to end-Jan came with the hint that it might want an additional pound of flesh for the extra time.
At stake is a lot more than just $1 billion. Failure to clear “prior actions” would kill the EFF, make loans from other bi- and multi-lateral donors more expensive, push up yields of Pakistani bonds, and also risk losing the Saudi loan and oil facility. The government has its work cut out for it indeed because it has just a few more days to decide about the fate of the IMF program.