IMF asks Pakistan to take decisive actions before bailout

ISLAMABAD: As a prerequisite for the bailout package, the International Monetary Fund (IMF) has asked Pakistan to take “decisive actions”, signifying that the international lender body remains inflexible in its demands.
The demand for implementation of drastic measures was made during a meeting between IMF Managing Director Christine Lagarde and Prime Minister Imran Khan on Sunday in Dubai on the sidelines of the World Government Summit, hosted by the United Arab Emirates.
“I also highlighted that decisive policies and a strong package of economic reforms would enable Pakistan to restore the resilience of its economy and lay the foundations for stronger and more inclusive growth,” a brief IMF handout quoted Lagarde as saying.
The IMF described meeting with the PM as “constructive” but the tone of its handout suggested that the IMF top management endorsed the stance of its staff negotiating with Pakistan.
In September last year, Pakistan had decided to seek a bailout package to avoid default on its international debt obligations. But things could not move in the desired direction as the Pakistan Tehreek-e-Insaf (PTI) government was unwilling to take politically unpopular decisions demanded by the IMF.
The IMF, according to sources, was asking Pakistan for further increase in electricity and gas prices, upward adjustments in tariff besides demanding a complete and meaningful free float exchange rate regime. Due to fear of political backlash, the government at that time was not ready to concede. It, however, has agreed to implement most of these measures now but only differs with the timing and pace suggested by the IMF.
Following the Lagarde-Khan meeting, Pakistan’s finance ministry issued a handout but it did not shed much light on the discussions.
“During the meeting, PM Imran Khan reiterated the government’s commitment for undertaking structural and governance reforms and strengthening social protection in the country,” it said.
Since coming to power last August, the biggest challenge for Prime Minister Imran Khan’s government was to avoid a sovereign default by shoring up its depleting foreign exchange reserves. Khan’s last year’s visits to China, Saudi Arabia and UAE resulted in aid packages from the three countries, which provided it some breathing space but experts still believe that IMF bailout is inevitable.