PTI’s promise of not going to IMF for bailout stands broken


The Promise

Throughout the 2018 elections campaign, Pakistan Tehreek-i-Insaf (PTI) Chairman Imran Khan repeatedly said that he would prefer committing suicide to going to the IMF for a loan. The PTI leader used to criticise PML-N and PPP governments for going to IMF and promised not to opt for loans during electoral campaigns.

Background

According to the IMF’s website since 1958, Pakistan have taken a total of 21 loans from the IMF, 12 of which can be called bailouts. In the past 60 years Pakistan borrowed from than $27 billion as per the current value of the SDR (IMF’s currency).

When it comes to Pakistan, we see an interesting trend with the IMF programmes — they are becoming longer and larger. By longer, we mean the pay-out period is increasing. For example, between 1958 and 1977, all the programmes were of one year. Coincidentally, all the IMF programmes in this period were also bail-outs or stand-by agreements. There was a total of seven programmes.

Between 1980 and 1995, we were part of another seven programmes and all but one were between one and two years long.

Between 1997 and 2013 — when the PML-N took the last $6.4 billion loan — there were a total of six programmes. With the exception of one, all of them were approximately three years long.

This will be the 13th time Pakistan is going to the IMF to ask for a bail-out, and overall it will be the 22nd loan we will take from the IMF.

Tracking

Since PTI led federal government came to power after the July 25th general elections, the economy has been going through ups and downs. Pakistan has approached the IMF for a $6 billion loan.

“Against the money given to Pakistan by IMF they would demand Pakistan to reduce its non-development expenses for bringing the budget deficit down along with expansion in the country’s tax net,” a senior official at the Ministry of Finance confirmed while speaking to Truth Tracker.

Another official agreeing with him shared IMF also wanted Pakistan to decrease circular debts and losses in state institutions.

Prime Minister Khan met IMF’s Managing Director Christine Lagarde on February 10, where after getting assurances from Mr Khan for undertaking structural reforms, Ms Lagarde showed the IMF’s willingness to support Pakistan.

PTI Viewpoint

Finance Minister Asad Umar said that IMF has changed its position about Pakistan after the recent meeting with PM Imran Khan on the sidelines of World Government Summit. “It seems we are closer to getting an agreement with IMF,” says smiling Mr Umar.

While answering the question that during the electoral campaign his leader Imran Khan repeatedly said that they would not go to IMF. Umar replied that when they took charge of the country it was in such a debt situation, that there was little or no revenue generation.

“To stabilise the economy we have to swallow the bitter pill of the bailout,” said Umar.

Opposition’s opinion

Talking to Truth Tracker, Senior PPP leader Sherry Rehman advised the PTI-led federal government to address the serious reservations of the opposition regarding the IMF bailout package. “The federal government must disclose the terms of the agreement in parliament,” said Ms. Rehman.

“Why are they keeping the terms of the agreement secret?” she asked. “What are the terms and how much loan will the government be taking from the IMF?”

For Rehman, this agreement means that the budget for the coming year will be coming from IMF headquarters.

So on IMF’s behest funds for the provinces are being decreased,” Rehman asked.

She demanded that the government must maintain transparency and address the reservations before the agreement is reached.

Talking to Truth Tracker, former federal minister of finance, revenue and economic affairs Miftah Ismail criticised the PTI government’s decision to go to IMF said that the government is taking U-turn again.

Mr Ismail opined that the federal government is incapable of handling any kind of situation.

“I have no intention of embarrassing the government but isn’t this diametrically opposed to PTI’s promise during elections campaign? Let me remind you they said PML-N took on a lot of foreign debt,” he said.

He shared the figure with Truth Tracker which showed that foreign debt under PML-N increased from $48 billion in 2013 to $70 billion in June, 2018, an increase of $22 billion.

“But in Naya Pakistan, the loss to Pakistani investors in the stock market is $1.9 billion,” he said.

Independent Viewpoint

While talking exclusively to Truth Tracker, acclaimed economist Dr Kaiser Bengali said that it is clear that Pakistan has to go to the IMF at any cost and to accept all its conditions.

“The myths surrounding the bailout package and conditions attached to it are absolutely false. The conditions of IMF are the same for $1 billion or $10 billion. So, we can’t say that lesser loans would mean less harsh conditions,” said Dr. Bengali.

Ruling

In the light of recent meeting of Prime Minister Khan with the IMF head and after going through the statements of the finance minister along with leading opposition leaders and an economic expert, Truth Tracker rules that PTI’s promise of not going to IMF stands broken.

The government is taking effective measures to strengthen the national economy and revamping the national institutions as well.

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