IMF report

THE IMF’s staff report on its new, short-term bailout loan of $3bn for Pakistan is a damning indictment of the Shehbaz Sharif government’s economic and financial policies that deepened the trust gap between Islamabad and the lender, and pushed the country towards the precipice in the last nine months. Policy missteps and breach of the previous Extended Fund Facility programme had compelled the lender to halt the disbursement of funds, closing the door on other multilateral and bilateral financing. The IMF document, released on Tuesday, also spells out the programme’s goals, many of which, such as increased energy prices, will directly burden the people. It blames the finance ministry and State Bank for their frequent tinkering with the market-based exchange rate mechanism, leading to the growth of a large foreign exchange black market. It is also critical of the central bank for resisting a timely increase in interest rates. That is not all. The report points out that the government balked at maintaining fiscal discipline, cutting non-essential spending, broadening the tax net, controlling the drivers of the power sector’s circular debt, and improving SOE governance.