Only two weeks back a confident Miftah Ismael told the Pre-Budget Business Conference, “We talked to them and we are very, very confident that we will soon have an agreement with the IMF”. Now, a week before the passage of the budget the government is nowhere close to a staff-level agreement for revival of the Extended Fund Facility (EFF). We are told that the IMF staff still has reservations over Rs9.5 trillion expenditures projected by the authorities for the next fiscal year and the revenue measures in the budget are also insufficient to deliver the slightly over Rs7tr target. Four days back the Finance Minister and his Deputy called on the US ambassador to seek his government’s support for revival of the Facility. A yet to be confirmed newspaper report from Washington says US has agreed to help Pakistan negotiate a deal with the International Monetary Fund (IMF).
Did the government fail to pay attention to the IMF demands on account of over confidence? Was the government carried away by Bilawal Bhutto Zardari’s apparently successful US visit and the US welcoming the ongoing IMF deliberations with Pakistan? Was the failure due to an attempt to simultaneously appease both the IMF and the electorate? Whatever the reason Pakistan’s economic problems continue piling up in the absence of the revival of the EFF. The inflation continues to rise while the dollar has reached new high to soar past Rs210 in interbank trade.
Inflation has provided Imran Khan an additional stick to beat the government with. In his Sunday night address IK warned people that spiraling inflation can turn Pakistan into next Sri Lanka. He asked them to take to the streets against inflation for their own good. Miftah Ismail has promised to control inflation in two to three months which is easier said than done.
PML-N led government’s failure to bring round the economy is leading some of its allies to gradually distance themselves from the alliance’s leading party. PPP’s Information Secretary Faisal Kundi says his party plays only an advisory role in the ruling alliance while decisions are the prerogative of the Prime Minister who leads the PML-N. Similarly Asif Ali Zardari has promised that if he got a chance to return to power, he will turn around Pakistan 110 degrees. Unless the Shehbaz government is able to deliver the PML-N will be isolated and made sole target of attacks.