The government’s populist slogans are not in consonance with its international pledges. While Prime Minister Imran Khan’s economic team was working hard to broker a deal with the IMF, Mr Khan announced 2021 to be year of growth for Pakistan. What this is bound to lead to, is exposure at home and loss of face abroad.
Just when Dr Hafeez Sheikh was celebrating his success in brokering an agreement with IMF and holding conference calls with bond investors, he was unceremoniously shown the door, with some close to the government holding him responsible for the rise in prices. It is widely understood that the IMF’s contradictionary fiscal policy leads to cutting jobs while the policy of reducing the subsidy bill and raising sales and income tax hit the low-middle-income segments, which are already shaken by the increase in electricity prices, food inflation, job losses and pay cuts. Businesses are also feeling the impact. With 1.3 percent GDP growth rate projected for the financial year by the World Bank, there would be more suffering in store for the common man.
Dr Sheikh’s removal is bound to raise eyebrows in international financial circles and among investors. The hints thrown by stopgap Finance Minister Hamad Azhar concerning a possible review of the IMF programme and the State Bank of Pakistan amendment bill are not likely to go well with international financial and rating institutions.
The government has declined to share the draft of the IMF programme with the National Assembly. There is a perception supported by media reports that some of the drastic amendments that were not proposed by the IMF were also introduced to favour the entrenched vested interests. That explains why Mr Azhar refused to commit himself when asked whether the government would make the IMF technical mission’s report public.
Mr Azhar’s own credibility got a hit a day after he got the additional portfolio. On Wednesday, after presiding over the ECC meeting, he announced that it was decided to import cotton and sugar from India. The next day the decision was reversed by the cabinet. This was the outcome of the interplay of countervailing pressures on the government which wants to run with the hare and hunt with the hounds.