It’s been a long time coming. Even though Pakistani officials believed the rescue loan would be finished and the long-stalled funding programme would resume after confirmation of the committed financial support from Saudi Arabia and the UAE, it appears that the IMF is still reluctant to move.It was quite surprising that the IMF’s request for additional guarantees to complete the deal came right as Prime Minister Shehbaz Sharif was assuring the markets that the lender no longer had a reason to delay approving the staff-level agreement after “friendly countries” had provided monetary guarantees.
Because of the disagreement between China and the Western economies over how to aid poor and middle-income countries, other financially distressed countries, including Sri Lanka, Zambia, etc., have also had to wait longer than usual to finalise their respective loan agreements with the IMF. But in the case of Pakistan, the Fund doesn’t seem to have many reasons to put off starting the scheme again.
The IMF’s resistance to completing the performance review and its insistence on carrying out severe prior sanctions were initially perceived as the result of the growing trust gap between the Fund and Pakistan as a result of the repeated programme target violations by both previous administrations and the current administration. However, despite the PDM government doing nearly all the necessary steps to be eligible for the Fund’s funds, the IMF continued to delay issues.
This hasn’t helped the IMF’s reputation in Pakistan since the holding up of the money’s release is adding to the financial problems of a nation plagued by continually rising costs, which the Fund’s strict requirements for aid are largely to blame for. Although the IMF’s position about the delay in the reinstatement of the programme is understandably puzzling, Pakistan’s leaders and policymakers must draw some sobering conclusions from the manner in which multilateral and bilateral lenders have acted this time. They must understand how much the world has changed in the last 20 years.
The world is not prepared to assist people who cannot assist themselves any more. Saudi Arabia has recently made it clear time and time again that if Pakistan wants to use the kingdom’s funds to repair its foreign account, it must adhere to IMF rules and tax its citizens. We’ve heard the same thing from others.The devastating 2010 floods prompted the Americans to make this statement. We disregarded their advice back then, and we still do so today. However, how long? True, we might eventually receive assistance this time as well. But unless our leaders and policymakers make difficult choices and take appropriate action, the world will no longer intervene to save us from a situation that we created on our own.