Pakistan: Excessive reliance on IMF may prove disastrous

Reading today’s’ headlines about approval of IMF package for Pakistan leaves a strange feeling. I am inclined to draw an inference, “Pakistan is not on the priority list of lender of last resort ‑ International Monetary Fund (IMF)”. Please keep in mind that a paltry amount of US$3 billion is to be disbursed to Pakistan over the next nine months.

To begin with, these nine months are very critical for Pakistan because: assemblies will complete their term, interim government has to be put in place and general elections have to be held. Allow me to say that during these months Pakistanis should not expected any improvement in the economic conditions, on the contrary, the economy could go from bad to worse.

Many analysts say, “The incumbent government has wasted time in debating ‘non-issues’ and refrained from taking some important decisions to put the economy on track”. The GDP growth rate is likely to remain below one percent, exporters are fast losing their competitiveness, hike in interest rate leaves no amount to undertake developmental work and efforts to contain import of raw materials are proving counterproductive.

It is feared that the interim government may defer elections on some flimsy grounds which could further deteriorate the economic landscape. Seeking new foreign exchange deposits from friendly countries and rolling over existing debts is plunging Pakistan deeper into debt trap.