Beggars cannot be choosers.

On the insistence of the International Monetary Fund (IMF), the federal government and the State Bank of Pakistan (SBP) did something last week that will deepen the ongoing political and administrative chaos, cripple the economy and multiply the miseries of 230 million Pakistanis. But they had to. Beggars cannot be choosers.

The federal government slapped a permanent debt servicing surcharge on electricity to generate Rs335 billion. This surcharge is the cruellest and most unjustified of all government levies. The government has levied it to partly reduce the circular debt of Rs800 billion parked in the state-run company.

This, in turn, is part of a much larger body of the country's total circular debt - Rs2.523 trillion at the end of the last fiscal year in June 2022. Meanwhile, the SBP raised its key policy rate by 300 basis points to a 27-year high of 20 per cent. The central bank also let the rupee shed 7.4pc value in a single day and lick an all-time low of Rs285.09 per US dollar.

The government and the SBP did all this to ensure that the Fund revives this month its loan stalled last year and the country gets the last tranche of $1.1bn of the loan as early as possible.

The higher interest rate will likely attract portfolio investment in government bills and bonds, creating a temporary breathing space

The release of the IMF money will help attract some forex funds from foreign commercial and investment banks and from friendly states, including Saudi Arabia, China and the UAE. This means forex-starved Pakistan will skip sovereign default for the time being.

But to make sure that it never defaults on sovereign payments lot more needs to be done. The country will have to seek another, larger IMF loan in the next fiscal year starting in July and undertake structural energy, fiscal and external sector reforms.

The current National Assembly will complete its constitutional term in the third week of August. The caretakers installed to oversee general elections will have to initiate talks with the IMF for the new loan. But the deal can be made only by the new government that will be voted into power after the elections.

All this should happen within this year - if everything is according to the Constitution. Meanwhile, headline inflation is at an all-time high of 31.5pc - and food inflation in urban and rural areas stands even higher - 41.9pc and 47pc respectively.

Currently, Pakistan's total liquid forex reserves held by the SBP as well as...