The IMF agreed to fork over a big pile of dough to keep Pakistan from collapse—for now. The New York Times has the story:
The I.M.F. has an unhappy history with Pakistanis, some of whom are likely to see the package negatively. The last government failed to meet the terms of the previous I.M.F. package six years ago, and the country is still struggling to repay billions of dollars of that debt.
Moreover, Mr. Sharif’s government is ideologically hostile to international financial assistance, and he campaigned before the election on a platform of economic autonomy. But, analysts say, his administration had little choice but to accept Thursday’s deal.
This financial package will stave off the most immediate of Pakistan’s economic problems, but there are few signs that they will be resolved. Pakistani newspaper Dawn enumerates the issues: “fiscal consolidation, containing inflation, resolution of energy crisis including settlement of circular debt, promotion of social safety nets, strengthening the financial sector, improving business climate, promoting foreign investment…”; on and on the list goes.
Pakistan’s privileged civilian elite is loath to give away the many entitlements, government subsidies, and favorable tax rates it has given to itself, and the IMF hasn’t been able to get past governments to abide by rules agreed under loan packages. Will things be different this time? We wouldn’t bank on it.
[Photo of Nawaz Sharif courtesy Getty Images]