There is an uncertainty surrounding the provincial elections and the pending IMF (International Monetary Fund) agreement, and while there may not be any direct link between the two, the lack of clarity on both counts is deepening the multifaceted economic, political, and constitutional crisis in the country.
On the IMF front, which is imperative for economic solvency, a ray of hope shone last week when Pakistan’s all-weather ally, Saudi Arabia, signaled its commitment to bridge the financing gap, which is a pre-condition for concluding the pending IMF’s SLA.
However, this hope was dashed when Finance Minister Dar quite inexplicably canceled his trip to Washington to attend the IMF-WB spring meetings.
The financing gap amounts to around $6 billion, and half of this is bilateral, with a $2 billion commitment from Saudi Arabia and $1 billion from the UAE.
The other half consists of commercial and multilateral loans, which are linked to the IMF agreement, with all commitments being interdependent. For instance, Saudi’s commitment is dependent on the UAE’s commitment, and other lenders are hesitant to provide additional funds without assurance from the two GCC (Gulf Cooperation Council) giants due to the risk of their own money becoming part of the restructuring.
The government’s approach is absurd. The SLA is yet to be finalized. Dar needs to make a pitch to other friendly countries and convince the IMF mission and management that debt sustainability is now ensured. Yet, Dar appears to be willing to forgo that opportunity. It is bewildering why, at this juncture, the PDM (Pakistan Democratic Movement) government would refuse to take every opportunity to ensure that the IMF deal is secured.
The question is, what domestic issues are more important than ensuring economic solvency for a finance minister? He is not an interior or law minister, who are directly responsible to deal with internal security or the unfolding constitutional crises.
He is not the prime minister of the country, even if he assumes himself to be the deputy chief executive. There is perhaps more to the story. Some circles in the media are insisting that since Dar could not secure meetings with the IMF’s managing director, US treasury secretary, and other relevant officers, he has decided against traveling to the US capital.
On the surface, the theory seems plausible. However, it does not add up, and seems to have even surprised the IMF team. The norm is that the IMF top boss usually meets with the head of government (the prime minister in Pakistan’s case), while the FM meets with other relevant executives at the IMF.
Dar did secure a meeting with Deputy MD Antoinette Monsio Sayeh and other important officeholders. He should have tried to get other relevant meetings while there. His decision not to go is sending the wrong signal and could make the pending IMF’s SLA even more difficult to finalize.
The question is, why is Dar behaving the way he is? Perhaps, the domestic situation he cited is truly the cause of his last-minute withdrawal.
The political scene is not going in PDM’s favor, and the Supreme Court wants progress on Punjab elections, which the government doesn’t want. For Dar, the political survival of PML-N is more important than the economic stability and financial sovereignty of the country. His actions certainly seem to demonstrate so.
PDM (especially PMLN) is paying the price of hubris -and political greed. In April 2022, when IK dissolved the assemblies and offered elections to the PDM, the latter refused the offer. At that time, Shehbaz Sharif, Asif Zardari, Fazlur Rahman and some others were driven by an itch for power grab.
Over the last 12 months, there have been times when the government could have moved towards the election, but it didn’t, as it was losing political capital by the day. Now, it is doing everything in its power to delay the elections and to arrest (or neutralize) IK, but nothing has worked so far.
The PML-N is boxed in, and the box is getting tighter and suffocating with every passing week. Which gives credence to the theory that they PDM is reluctant to complete the IMF deal and go into the elections right away as it does not want to offer economic stability on a plate to the new government, which could be led by IK and PTI, based on recent surveys. If that is the case, they are playing with the economic future of 230 million people. The public will never forget or forgive the members of PDM coalition if this ends in a painful economic default.
Copyright Business Recorder, 2023