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Prime Minister Imran Khan repeated his narrative yet again while addressing an 87-member delegation from Balochistan participating in a national security workshop: the country has achieved economic stability after a staff level agreement was reached with the International Monetary Fund (IMF) on 12 May 2019 with prior conditions met - a market-based exchange rate, 13.25 percent discount rate and budget approval - with formal loan approval effective from the start of the next fiscal year, July 2019 and that there will be no let up in his battle against corrupt elements as that would secure the country's economic future.

The stability that the Prime Minister refers to is with respect to the massive, around 75 percent, decline in the current account deficit though his government is silent on three associated relevant factors that could have far reaching socio-economic and political implications: (i) it was recently pointed out by the IMF mission chief for the Pakistan programme that the current account deficit has declined but as a percentage of Gross Domestic Product (GDP) it has not declined appreciably meaning thereby that the country remains a net borrower from the rest of the world; (ii) the cost of the reduction in the current account deficit has been a decline in the growth rate of large scale manufacturing sector (LSM) as imports of raw materials and semi finished products became more expensive due to the rupee depreciation (with a consequent impact on medium and small scale downstream industries servicing the LSM sector) disabling them from competing internationally and leading to a rise in unemployment; and (iii) further dampening productive activity of medium and small scale service and productive sectors has led to erosion of the income earned, particularly by the private sector, which unlike the public sector, has not been able to keep incomes at par with inflation this year; or in other words, inflation is reflecting a rate that is not taking account of the erosion of incomes. To add to the problem of contracting incomes, food inflation is in excess of 20 percent which implies that the poor and the vulnerable would be hard pressed to feed their families.

This newspaper has consistently maintained that the design of the IMF programme reflects the IMF's experience with Pakistan in previous programmes most of which were abandoned before completion. Consequently this programme has been brutally loaded upfront with prior conditions and targets to be achieved during the first year of the programme. As if that was not enough, our economic managers have gone beyond the agreed conditions by over-correcting the rupee value that remains undervalued by about 5 percent and the discount rate of 13.25 percent is too high for productive sectors to borrow which explains why output is down and non-performing loans have risen and the budgetary targets are unrealistic notably the 5.5 trillion rupees to be generated by the Federal Board of Revenue (projected at 300 billion rupee less in the IMF first review report). However, we fully support the structural reforms that have been agreed with the Fund, and one can only hope they would be implemented though at present the power sector receivables continue to rise with reliance on raising tariffs to meet the Fund's full cost recovery condition as during previous administrations with the general public and productive sectors bearing the cost of the sector's inefficiencies and/or corruption.

As was expected there have been several lacunae in filing of corruption references against those associated with previous administrations and reflected in the amount generated through plea bargain. On the last day of July 2019, Shahzad Akbar tweeted, "first major recovery of 2.1 Billion a breakthrough in Fake Accounts Case [as] one accused enters plea bargain [and] admits his guilt [and] role in sham deals in Sindh in one of [the] Omni group matters." The largest amount, to the tune of around 190 million pounds was recovered from a real estate tycoon with political connections with all previous governments (as well as the incumbent Khan administration) through the United Kingdom's National Crime Agency following an investigation into his frozen bank accounts in the UK.

To conclude, 2019 was a very difficult year for the general public and the Prime Minister's insistence that 2020 would be a year of growth is unfortunately challenged by the IMF's low growth forecasts till the end of the programme in September 2022. The government needs to take note of the fact that as noted by the IMF in its first review report education and health have suffered from considerably less than budgeted disbursements and targets on tax refund arrears were also missed with a consequent impact on productive sectors.