Finance: It’s time for a reawakening

The International Monetary Fund (IMF) says Pakistan’s economy can grow 2.5per cent this fiscal year. This modest growth will be achieved on a low base of 0.3pc for the last fiscal year, which ended in June. This may pave the way for another two to three years of equal or slightly higher levels of growth if Pakistan is able to secure a large-sized ($8 billion-$9bn), three-year extended Fund Facility of the IMF after completing the ongoing nine-month $3bn Standby Arrangement (SBA). There is apparently no way for the economy to grow in the absence of an IMF loan in the near future. The reason is that Pakistan is heavily dependent on foreign state and commercial loans. For some years, it has been borrowing just to repay foreign loans and avoid sovereign default. And seeking loans — even from the friendliest countries or their commercial entities — isn’t possible without an IMF programme. Pakistan has lately learned this lesson the hard way. This is a plain fact. Pakistan’s economy can be expected to expand modestly for three fiscal years, including the current one that began on July 1, on the back of a large IMF loan immediately after the current SBA. But even a $8-$9bn IMF loan will not guarantee the continuation of this modest growth or accelerate its pace after three years.