The Forex reserves are at four-year lows triggering fears that Pakistan won’t be able to finance its monthly import bills. The country had taken its last bailout package from IMF in 2014. It received £823million ($1billion) at that time, however currently it desires another influx of money from the IMF or China.
The country’s monetary woes will be a primary test for Pakistan’s newly elected would be PM Imran Khan, the former international cricketer who stormed into the National Assembly earlier this month on a promise that he will make the Islamic Republic of Pakistan self-reliant.
If he goes for another IMF loan, which is pegged at £7.82billion ($10billion), the country might be subjected to IMF’s strict austerity measures, which will result in breaking his poll pledge.
The bailout would have damaging consequences within the short-term like raising public utility bills for all e.g. electricity bills, cutting subsidies for the agriculture sector and auctioning loss-making public assets like Government Ventures which are in red for ages.
One of Imran Khan’s campaign guarantees was to make Pakistan into an “Islamic welfare state” and for this, any kind of monetary restrictions would make it unachievable. Mr. Imran Khan had also pledged that he will spend public money on providing health care for all, increasing the social safety and upgrading educational institutions upwards from schools.
Uzair Younus, director of South Asia at strategy firm Albright Stonebridge Group, brands the Islamic Republic of Pakistan as an “IMF addict”. He also indicated that any further bailouts would hinder the country’s efforts on any kind of reforms. He said: “Alongside distortionary tax policies, the IMF has forced the finance ministry into cutting unplanned expenditure without any real reforms. Fresh IMF funding will again lead Khan’s government into repeating Pakistan’s past mistakes by not rolling out welfare measures to their people.”
The second choice would be for the ex-cricketer to go for a Chinese Loans. However, by choosing this option Pakistan risks going deeper into “China’s debt trap”. Already Pakistan has taken a large number of loans from China at an exorbitant interest. This is having a spiraling effect which already has started taking Pakistan into a spin.
It should be noted that Balochistan which is a major province has been simmering due to neglect. The Pakistan Army had been shutting the province out by using brutal force. There have been instances where it has been reported that the Army was involved in committing mass murders of a class which can be categorized as Genocidal. Abduction, extrajudicial killings, rape of women is being reported rampantly. Recently, there has been a suicide attack on Chinese engineers working on CPEC project in Balochistan. This will surely increase the expenditure due to employment in the protection of the CPEC project.
Apart from this, there is immense pressure from the Eastern border with India. Pakistan Army has been waging an indirect war with India for more than three decades now. India has been giving befitting reply for the past four years after the new BJP government has come to power in Delhi. The drain in the ammunition reserves in the times of Forex crunch is going to pinch Pakistan Army further.
It will be a testing time for the Pakistan Army which works as a Deep State Pakistan. It is also the true controller and driving force behind Mr. Imran Khan. Whoever is in absolute control the actual visible effect will be that Imran Khan will not be able to meet his promises which he made publicly. The promises made in private to the Pakistan Army may also not be fulfilled due to monetary restrictions imposed by IMF. Imran Khan may have been a great Cricketer but we will have to wait and watch how he makes balances the power equation to resolve the current financial crisis.
15Aug 2018/Wednesday Written by Mohd Tahir Shafi