An unfeeling IMF

And an optimistic Finance Minister

The PML-N led alliance had reiterated that it could resolve the economic problems including withdrawal of the huge subsidy on petroleum products if its government was allowed to finish the remainder of the NA’s tenure. The government argued that an enormous hike in petrol prices would raise the cost of all consumer goods and make it unpopular. The ruling alliance proposed enforcement of palliative measures to reduce the impact of the withdrawal of subsidies. With the establishment unwilling to concede the alliance’s demand, there are reports of differences between the two becoming sharper. The sudden return of former Finance Minister Hafeez Sheikh, the security protocol provided to him and no explanation given about the purpose of his arrival have added to prevailing misunderstandings. The coalition government is consequently reluctant to take tough economic decisions, including ending fuel subsidy which the International Monetary Fund (IMF) has linked with the revival of the loan programme.

Finance Minister Miftah Ismail’s statement adds to the gravity of the situation. A day before flying to Doha he said he was going to convey to the IMF that fuel and energy subsidies which were introduced by the previous PTI government could not be reversed as the nation cannot endure it. The delay in ending subsidies is already leading to negative consequences for the economy. The PSX benchmark shed over 500 points as finance minister left for talks with the IMF while the dollar marched on to Rs201 in interbank trade. The longer the decision on fuel subsidies is delayed the greater the loss to the economy. One simply fails to understand the Finance Minister’s optimism. Two weeks after the PML-N led alliance came to power, it was agreed between IMF Pakistan’s Mission Chief Nathan Porter and Finance Minister Miftah Ismail “that prompt action is needed to reverse the unfunded subsidies which have slowed discussions for the 7th Review.” And now the Finance Minister wants to tell IMF that Pakistan cannot endure the end to subsidies and intends to ask the Fund to give him a break. Is he hoping that recent talks between Secretary Blinken and FM Bhutto-Zardari might have brought about a change of heart in IMF? Miftah Ismail has also said the country will hear “good news” soon and he would not return without a deal. While keeping our reservations to ourselves, we would wish him Godspeed.

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The Editorial Department of Pakistan Today can be contacted at: [email protected]

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