Back to IMFhttps://indianexpress.com/article/opinion/editorials/back-to-imf-pakistan-imran-khan-5401822/

Back to IMF

It’s a testing time for Pakistan. The economic crisis also presents its new PM with an opportunity to course correct

Back to IMF
Khan discovered soon enough that no one — not China, not Saudi Arabia — would fork out the monies to tide over the current macro-economic crisis.

It did not take long for the reckless populism of Prime Minister Imran Khan, who took charge of Pakistan barely two months ago, to catch up with a deeply troubling reality confronting the nation. PM Khan was well aware that Pakistan’s economy was broke and its international standing at a low ebb. There was no doubt that the much celebrated partnership with Beijing — in the form of the China-Pakistan Economic Corridor — had contributed to Pakistan’s debt trap. Khan’s response to these issues during the election campaign was sweeping criticism of the government’s failures but no concrete ideas on how to redress them. Getting into office seemed to make little difference. His early emphasis was on friviolous steps — sell imported cars, hand over the PM’s official residence to a university, avoid foreign travel. But policy rubber has finally met the road and the heat of the friction can’t be missed.

Nothing illustrates this better than Khan’s decision to go back to the International Monetary Fund for a bail-out. Pakistan’s PM’s hopes for a rescue from friendly powers were quickly belied. He discovered soon enough that no one — not China, not Saudi Arabia — would fork out the monies (some estimates put the need between $8-12 billion) to tide over the current macro-economic crisis. To be sure, this is not a mess of Khan’s making. It certainly is not the first time that Pakistan has gone to the IMF — it is the 13th since 1980. What, then, is the big deal? Why can’t Khan do what all his predecessors had done — get the IMF bail-out but refuse to implement the conditions?

In the past, Pakistan’s geopolitical value to the West allowed Islamabad to play fast and loose with the IMF. That space has shrunk significantly this time around. The US Secretary of State, Mike Pompeo, warned weeks ago that the US would not let the IMF lend to Pakistan so that Islamabad can pay its growing debt to Chinese lenders. Christine Lagarde, the managing director of IMF, has said she would insist on Pakistan opening all its books. That puts Imran Khan’s ambition to build an “Islamic welfare state” at odds with the IMF demands that would include further devaluation of the rupee, cuts in social spending and expansion of tax base. To be sure, Imran could find some wiggle room by offering something political that Washington badly wants — compel the Afghan Taliban to stop fighting and start talking. Washington’s demands however, run counter to the Pakistan army’s long-standing plans to re-install the Taliban in Kabul and Imran’s self-constructed image as “Taliban Khan”. Khan and the Army could, in theory, turn this challenge into an opportunity with a two-fold strategy — launch long overdue economic reforms and stop destabilising Afghanistan. If he embarks on this agenda, Khan will go down as a great statesman. If he can’t, Pakistan’s mess would turn bigger with huge consequences all around.

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