The IMF’s approval will be needed if the government wishes to provide relief to the flood-affected peasantry by writing off their electricity bills, even though if not written off, the burden of the bills is such that many of the affected consumers would be unable to pay those bills anyhow, leading to the money still being lost, unless piled up as receivables. The IMF is to be asked to sign off on a one-month waiver for all consumers. There is double anxiety about the IMF’s approval, for it has historically been hypersensitive about anything to do with power sector finances, and it has a review team arriving soon to conduct the second review of the ongoing Extended Fund Facility of $7 billion. The first review ended with concerns about revenue collection and provincial finances. The second review is already complicated because of the floods, with tax collection and spending figures, as well as inflation and growth targets, all askew because of them.
It bears remembering that national sovereignty means the ability to spend to meet national aspirations, and having the IMF vet every spending proposal is clearly a violation. At the same time, it could be argued that the government was composed of adults who went into the deal with their eyes open, and knowing that if the IMF agreed to lend Pakistan the money, it would do so on condition that it got control of the nation’s economy. Thus, the IMF would be perfectly justified to ensure that when giving relief, whether by the waiver of electricity bills, agricultural income tex (another point where the IMF would demand a say) or any other means, the government ensured that the books were balanced.
However, it should not be forgotten that this is not an ordinary government transaction, not the reconstruction of a destroyed bridge or a washers-away road; it is the relief of people who have lost their homes and household goods, who have lost their livestock and their crops, who have nothing but the clothes they wear and a determination to rebuild their lives. The IMF must be convinced that people matter more than money. If the government cannot help people now, will it be able to do so in the future, when calamities such as the floods will be worse than at present?
