Dr Qaisar Rashid<\/p>\n
Following the successful conclu\u00adsion of the review on the second tranche, Pakistan is now eligible to receive the third and final tranche (amounting to $1.1 billion) of the nine-month Standby Agreement with the International Mone\u00adtary Fund (IMF). With that, the country\u2019s drive towards em\u00adbracing a market economy re\u00adcommences \u2013 reminiscent of the post-Cold War 1990s. Pakistan finds itself back at square one.
\nThe nudge, mediated by the IMF, is in\u00adtended to compel Pakistan to introduce structural reforms to achieve the targets of liberalisation, deregulation, and pri\u00advatisation \u2013 a maxim close to the IMF\u2019s heart. As a result, Pakistan must allow its currency to float freely, relinquish con\u00adtrol over several state-owned enterpris\u00ades, and permit privatisation. The primary objective is to lessen the burden of expen\u00additure on the government. The second\u00adary objective is to strengthen the private sector, which upholds the aim of perfor\u00admance with efficiency and profitability.
\nWith its three tranches, the Standby Agreement, which concludes in mid-April, has placed a premium on both ef\u00adficiency and profitability in Pakistan. No country can continually compromise on these aspects solely for the sake of sov\u00adereignty, expressed through state con\u00adtrol, especially when lacking natural resources (such as crude oil) to run its economy at its own behest. The country must reduce its imprint on the shape and flow of the economy. The condi\u00adtions leading to the issuance of the third tranche are bound to reset the bound\u00adaries of Pakistan\u2019s sovereignty, with far-reaching administrative, political, and economic implications.
\nThrough the mutually agreed third tranche, the IMF has reshaped the con\u00adtours of Pakistan\u2019s trajectory. One ben\u00adefit could be that, after undertaking the agreed structural reforms, Pakistan would be less reliant on internation\u00adal borrowing and aid in the future. Eco\u00adnomic sufficiency would allow Pakistan to make decisions without appeasing one bloc of international players against another. Additionally, international play\u00aders would find fewer levers to manipu\u00adlate Pakistan to their advantage. Eco\u00adnomic adequacy would help Pakistan shed the image of a client state.
\nBy successfully securing the third tranche, Pakistan has acknowledged the success of the Standby Agreement, which in turn has set the tone for any Extended Fund Facility (EFF) offered by the IMF. A reason for accepting the con\u00additions for the third tranche was Paki\u00adstan\u2019s interest in the EFF, contrasting with the frequent past practice of aban\u00addoning agreements with the IMF mid\u00adway, incomplete. To avert sovereign de\u00adfault on external payments, a nervous Pakistan desperately requires further monetary assistance from the IMF in the future. Pakistan is gripped by pan\u00adic and demoralisation, seeing no pros\u00adpects for any financial aid, windfall or otherwise, from any quarters of its re\u00adgional or international associations. On the other hand, twenty-three inter\u00adactions with Pakistan have mellowed the IMF, which has adopted a calm ap\u00adproach, now hedging its bets.
\nWhereas the Standby Agreement is considered essential for Pakistan\u2019s eco\u00adnomic stabilisation, a long-term bailout package (such as the EFF) is considered mandatory for the country\u2019s sustain\u00adable economic recovery. Nonetheless, the Standby Agreement has prepared the ground for introducing reforms through the EFF, expected to be negoti\u00adated after mid-April.
\nThe third tranche is responsible for initiating further internal wrangling within Pakistan. Political parties that lobbied for the 18th Constitutional Amendment (passed in April 2010) to materialise the goal of provincial au\u00adtonomy enshrined in the 1973 Constitu\u00adtion are the most reluctant to accept any curtailment of their autonomy. The cor\u00adresponding 7th National Finance Com\u00admission Award (signed in December 2009) financially expressed the concept of strong provinces and a weak Centre, personifying provincial autonomy, with\u00adin the context of the federation. In fact, without financial leeway granted to the provinces, the idea of provincial auton\u00adomy in political terms is otiose.
\nIn 2010, the provinces had concluded that mere administrative empowerment was insufficient to embody the right of provincial autonomy within the federa\u00adtion, called Pakistan. If the provinces are not performing to their utmost, it is not the fault of the concept of provincial au\u00adtonomy. Instead, it is because the Cen\u00adtre somehow retained ministries that should have been devolved to the prov\u00adinces immediately after 2010. Now, in 2024, the provinces are reaping the re\u00adwards of this fourteen-year deficit. The provinces stand defeated by the Cen\u00adtre\u2019s capacity for the retention of pow\u00ader. Islamabad, epitomising the Centre, is no longer simply a city; instead, it is bor\u00addering on the status of a province \u2013 an undeclared, unrecognised one. The Cen\u00adtre\u2019s yearning to retain its potency con\u00adtributes to provincial inefficiency.
\nThe third tranche has also dictated that the presence of circular debt in the electricity and natural gas sectors is un\u00adacceptable. No subsidies can be provid\u00aded. Instead, tariff adjustments must be made by raising rates, while protecting the vulnerable through the existing pro\u00adgressive tariff structure. Similarly, re\u00adtail and real estate businesses must be brought into the tax net. The policy of exclusion has brought Pakistan to its knees, as the country is forced to sell na\u00adtional assets to avoid bankruptcy.
\nBoth the existence and performance of the Federal Board of Revenue (FBR) are under scrutiny. The organisation has re-affirmed centre stage in the make-or-break of the country\u2019s economic ad\u00adequacy. As an immediate concern, the third tranche has done two things: first\u00adly, it has readjusted the revenue targets for the FBR; and secondly, it has asked the FBR to drop its quarterly approach and make monthly efforts to meet the revised targets of revenue collection to reach 30th June successfully. Never\u00adtheless, the near future is bound to see structural renewal of the FBR to im\u00adprove its performance. Come what may, Pakistan is heading for digitalisation and documentation of the economy.
\nPresident Zardari awards Nishan-e-Pakistan to Saudi Arabia\u2019s defence minister
\nThe writer is a freelance columnist. He can be reached at qaisarrashid@yahoo.com<\/p>\n","protected":false},"excerpt":{"rendered":"
Dr Qaisar Rashid Following the successful conclu\u00adsion of the review on the second tranche, Pakistan is now eligible to receive the third and final tranche (amounting to $1.1 billion) of the nine-month Standby Agreement with the International Mone\u00adtary Fund (IMF). With that, the country\u2019s drive towards em\u00adbracing a market economy re\u00adcommences \u2013 reminiscent of the […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[1683],"class_list":{"0":"post-395836","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-article","7":"tag-dr-qaisar-rashid"},"yoast_head":"\n