IMF's do more tantrums.

Byline: Syed Qamar Afzal Rizvi

OSTENSIBLY, the developing world is seriously watching IMF's procrastination tactics regarding its approval of an aid package to Pakistan-demonstrating unqualified ifs and buts- which reflects its illiberal approach towards a developing state, like Pakistan whose economic condition requires an accommodating monetary synergy by the International Monetary Fund.

The IMF has three critical missions: furthering international monetary cooperation, encouraging the expansion of trade and economic growth, and discouraging policies that would harm prosperity. Pakistan and the IMF 9th review discussion was apparently concluded in the second week of February, but a staff level agreement (SLA) is yet to be reached. The 9th economic review was supported by the extended fund facility (EFF) arrangement. In these dealings, it was decided that negotiations could not become functional until the state provided an economic framework.

Before coming to Pakistan (31 January), the IMF conveyed the message indicating to Pakistan authorities that they must take some required actions vis-a-vis the EFF. The EFF is a facility offered by the IMF where a country can borrow money for addressing its structural and economic problems. For two weeks consecutively, the IMF team discussed the 9th review of the $7 billion extended fund facility. The main agenda was to hold technical talks based on economic data given by different departments. The prime focus of the Fund remained the inducement of those monetary and fiscal policies which are core to restoring and guaranteeing sustainable growth.

This perspective exclusively aims at strengthening the fiscal position of the state through high-quality measures that are durable. Another provision of the deal is the implementation of a hike in fuel prices. The diesel levies are to double to around 5 PKR a Liter from the month of March, with the second hike to start from 1st April. Apart from these targets, there was an emphasis laid during the meetings on revenue collection, phasing out the untargeted subsidies, and non-interference with the exchange rate. The IMF has also imposed the condition that by April, the Ministry of Finance and State Bank of Pakistan (SBP) will establish a Development Finance Institution to support the eventual phasing out of SBP refinance facilities. The new institution will take responsibility for the SBP refinancing scheme, assess the Export Refinancing Scheme (EFS) by...