Will Pakistan ditch IMF recipes as social tensions spiral?

Is crisis-hit Pakistan developing cold feet in going in for fresh programmes carried out by the International Monetary Fund? Two sources told India Narrative that deliberations have taken place if ditching the IMF-led schemes would be better for the economy. IMF programmes leave little room for Islamabad to take decisions freely. While people have taken to the streets to protest against the increased power bills, the caretaker government might not be able to provide any substantial relief as the decisions to raise electricity tariff are linked to the IMF’s $3 billion financial assistance package.

A reduction in power bills could jeopardize the assistance package. The IMF loan helped Pakistan avert a sovereign default but has led to deepening of the economic crisis.

Before the IMF agreed to approve the loan package, a section of the policymakers was of the opinion that Pakistan is better off defaulting than going in for the IMF bailout programme, one of the sources told Inda Narrative.

The IMF diktat has led to rising angst among the citizens and businesses alike.

The hike in power bills amid the ongoing depreciation of the local currency—the (Pakistani) rupee has led to closure of many factories and businesses. On August 14 the rupee, which was valued at just below 294 against a US dollar, breached the 305 mark against the greenback earlier this month.

Pakistan’s all-powerful Chief of Army Staff (COAS) Asim Munir held a meeting with the country’s business community and assured them of relief.

According to local newspaper Dawn, Munir has now “hinted at not going towards the International Monetary Fund (IMF) for any new programme as the fund does not give any permission to work freely and an increase in power rates was also a part of the programme.” Munir is keen to increase investments from the Gulf nations including Saudi Arabia, UAE and Qatar.

Meanwhile Pakistan’s economic crisis is worsening since the caretaker government has taken over. The imminent delay in holding general elections has led to more uncertainties.

“There is a growing disconnect between the general public and those in positions of power,” the Express Tribune quoted Babar Mahmood, president of Electronics Market Traders Union in Lahore as saying.

“The current economic crisis and political meltdown are not just ruining the day-to-day lives of people, the status quo is breaking families and destroying the little patriotism left among the common people,” the Express Tribune earlier said in an editorial.

Also read: Pakistanis enraged after caretaker PM says furore over electricity bills is overblown