It’s a little strange that in all the ongoing talk surrounding the revival of the IMF program, and especially the conditions associated with it, nobody’s yet noticed that this fiscal year’s budget has also completely changed. It’s up to journalists, fiscal policy researchers and academic professionals to see if this has any parallels in human history, but barely one-quarter into the new fiscal year, the government has agreed to conditions which, after first ruling out any such thing, have already taken the air out of its expansionary, subsidy and tax-break-laden budget.
Soon, people will also remember that the de facto finance minister, Shaukat Tarin, had also promised that he wouldn’t agree to tough terms like tax and tariff hikes, or take back any subsidies; instead, he’d make the IMF come round to his point of view. That was the thinking behind the radical budget that was sold with so much fanfare by the government. Businesses then made the mistake of counting on these promises and made production upgradations of their own, complete with new bookings for more exports and a brighter future. Now they’re finding out that all concessions that they based their own expansion on have suddenly been taken away. All this has happened because the government could not, contrary to its promise, make the Fund understand its point of view so now everybody who believed it is going to suffer along with all those people who didn’t and warned of just such a day.
There’s more, of course. The Saudi loan is also without parallel, at least in our complicated history. Along with the tough interest rate and small call-back window (72 hours), there’s also a very embarrassing erosion of sovereignty. That’s because the Government of Pakistan has agreed to allow the Kingdom of Saudi Arabia to pull back the financial lifeline in case we make diplomatic alliances that it doesn’t approve of. Any arbitration, if needed, will be conducted according to Saudi, not Pakistani, or even international, law. All that for $4.2 billion shows that the government’s ability to raise more debt is reducing by the loan.
The best points that the budget scored for the government were political, not economic. It was able to sell the argument to inflation-hit people that it cared enough about them to sprinkle them with concessionary financing and public relief programs; both of which are off the table already. Perhaps it’s only fitting that the annual Ipsos survey also came out just around this time. It’s no surprise that it found 87 percent of the people surveyed unhappy with the direction the country has taken; and their number-one concern is out-of-control inflation, followed by unemployment. Also, the way the government is lashing out in desperation, and opening multiple fronts at the same time, is very predictable behaviour for those who are watching closely. For, in the time between two federal ministers called the Election Commission of Pakistan (ECP) things like opposition’s lackey that should be set on fire to the time they both apologised for it, the ruling party seems to have lost the support that held it up all this time.
It’s also not very hard to see why those backers would want to back off now. Despite a completely free run for more than three years, the country is a wreck financially, diplomatically and also politically. The economy’s never been in such dire straits, we’ve never been treated so badly by our traditional allies, and the country’s politics has never been so divided. Plus you’d have to go out on a limb to find somebody not associated with PTI who’s even remotely satisfied with the way things have turned out these past three or so years. Till recently, it seemed that PTI might survive the complete electoral cycle before being tossed aside by the people at the next general election. But now it’s looking as if it cannot survive that long even if the opposition makes no more trouble for it. Its own blunders and arrogance have brought it to the point where nothing is working with the economy, we are isolated internationally, and the government will fall under its own weight sooner rather than later.
Why else do you think coalition partners are straining at the leash, so to speak, and the recent joint session required so many phone calls before it could finally be pulled off? Is this the Naya Pakistan we were promised?
