LAHORE: At this point, the government’s repeated claims that a deal with the International Monetary Fund (IMF) is only a few days away have become laughable. On Tuesday, Interior Minister Rana Sanaullah said the agreement with the lender would be inked formally during next week.
The claim came during a public address in the interior minister’s native Faisalabad. But such claims by different government officials have become a dime-a-dozen. The only question is whether the government is still trying to (albeit desperately) convince the public or convince itself.
The mantra of right around the corner has been repeated ad nauseum since at least January, when finance minister Ishaq Dar gave up on his misguided plan of fighting the IMF. Those initial months where the government and the IMF were engaged in a Mexican standoff have brought the country close to default.
The IMF team came to Pakistan on the 1st of February, which was already pretty late in the context of the 9th review. What is however more important is the way in which their arrival was anticipated by the government. In the start of December 2022, the Finance minister Ishaq Dar assured that within 2 weeks, friendly countries would lend $3 billion to Pakistan after which the IMF deal will come through.
On the 9th of January, the Prime Minister of Pakistan stated that the IMF team is about to arrive in a couple of days. Weeks turned into months, days turned into weeks, but when the IMF team finally arrived, on the 1st of February, Pakistan was still not able to secure the Staff Level agreement. The two week long visit was followed by negotiations that were supposed to happen virtually.
Little to no news left the boardrooms of these negotiations with the IMF but one after the other, steps were taken in lieu of the IMF prior conditions. Contentions on fiscal budget, revenue collection, exchange rate and smuggling all were resolved, and Pakistan imposed additional taxes worth Rs 170 billion. Currency was depreciated but the SLA still did not come through. While presenting the finance (supplementary) bill in the Parliament on the 20th of February, the finance minister said that this was the last step required to fulfill the IMF program.
Later, it was State Minister for Revenue Aisha Ghaus Pasha that said written assurance from friendly countries of financing to Pakistan is something that the IMF team requires. What is perhaps because of the tall claims made by Ishaq Dar last year, Pakistan now has to prove the worth of its friendships.
Since then, the entirety of the Q-block has maintained that the IMF deal is about to materialize. These presumably last minute housekeeping issues that took a month to resolve finally seem to have come to a close. After a long wait, Saudi Arabia has assured its financing of $2 billion dollars to the IMF. The UAE has also given assurances.
At this point, the IMF deal might actually be close. But with political instability rising in the country and the government out of power outside Islamabad, it is anyone’s guess. The problem is, even if the staff level agreement is signed, the government’s claims have become worth not more than words in the air.