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Prime Minister (PM) Imran Khan's address to the nation after returning from Saudi Arabia was meant to proffer the good news that a $ 6 billion package had been secured from the Kingdom, comprising $ 3 billion to be deposited to boost our depleted foreign exchange reserves and the rest in the form of deferred payment for oil imports. Had the PM confined himself to just this breakthrough, his address would have come across as statesmanlike. However, Imran Khan being Imran Khan could not let this (or any other) opportunity slip to reiterate his signature themes. Describing this package as a big relief, the PM said this would go some way towards reducing our dependence on the IMF. Expectations are that the forthcoming visits of Imran to China and Malaysia may help bring in another $ 2-5 billion, which would further reduce the need for a bigger IMF loan that the PM argued would put Pakistan in a stronger position to negotiate IMF conditionalities. Since the IMF's prescriptions lay down stringent structural reforms and austerity (particularly dampening demand), a smaller loan from the IMF retains the hope that the government will not have to accept conditionalities that would place a heavier burden on the common man. The question of what Pakistan had committed in return for the Saudi package was not answered in the PM's address, except perhaps a reference to our playing a mediatory role in the Yemen conflict. Our parliament had passed a resolution during the previous government's tenure against sending troops to Yemen to help the Saudi-led alliance against the Houthis. This was the gelled wisdom of our legislators, who saw the Yemen quagmire as a dangerous playground likely to suck Pakistan into a sectarian nightmare. Mediation may sound like a good idea, but given the hard positions on both sides of the conflict, this sounds more like the triumph of hope over reality. The unanswered question of the terms and conditions agreed to by the PM to garner the package continues to agitate the PML-N, PPP and ANP, who have all demanded the details be revealed, preferably to parliament. Former senate chairman Raza Rabbani also suggested that if some details were sensitive, an in-camera session could be held. The government's response is awaited. However, given the PM's diatribe during his address against the previous two governments of the PPP and PML-N, whom he once again held responsible for plunging the country into a serious financial crisis by taking foreign loans recklessly and allegedly siphoning off huge funds through corruption, it seems highly unlikely that the government's response to the opposition's calls for transparency will be heard. The opposition also resented his well-worn narrative about putting all corrupt leaders in jail in an unrelenting drive (No NRO, the PM reiterated).
The impact of the good news on the market was positive, with both the stock market and the rupee rising. Certainly if more friendly countries bail Pakistan out and the rest is taken care of by the IMF, the fiscal space opening up will restore the government's finances to safety. However, there is good reason for asking the government to help lower the unrealistic expectations from this government that were the result of its rhetoric while in opposition. For example, the schemes to build five million houses and create 10 million jobs should be revisited after the real fiscal space emerges. Even if incoming finances provide the cushion the government is aiming at, these two projects alone require more billions than are at hand. On these issues, the government's interests may be better served by trimming such targets to something approaching realism, based on the level of financing available. Container-top rhetoric cannot serve as policy once the PTI has assumed the reins of power and is charged with actual management of the economy and the country.

Copyright Business Recorder, 2018

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