Is debt-ridden Pakistan set to kowtow before IMF?

Though reports suggest that the pending ninth review between IMF and the Pakistan govt for the release of $1.18 bn will finally take place this month, the delay has led to concerns for Islamabad

After severely criticising the International Monetary Fund (IMF) for setting stringent riders for the $7 billion loan package under the Extended Fund Facility (EFF) programme, Pakistans Finance Minister Ishaq Dar may have to eat humble pie. Reason? The immediate challenge for the Shehbaz Sharif government in the New Year will be to iron out issues with the IMF and ensure continuity of the loan package. For Pakistan with just $$5.821 billion in its foreign exchange kitty amid debt repayment obligations of more than $8 billion in the next three months, the risk of a default has multiplied. It will have to make a repayment of $1 billion to two foreign banks by this month.

"The IMF is pressing for acceptance of its conditions. If we back off it will create more problems for the country," the minister told a press conference here on Saturday, Federal Minister Planning for Development Ahsan Iqbal said yesterday.

Dar has come under the spotlight. A close aide of close aide of PML-N supremo Nawaz Sharif, Dar has been critical of the IMF. He has even gone to the extent of saying that he will not take the IMF "dictations."

"I do not care if they come, I don't have to plead before them. I have to look at Pakistan's interest first," he said earlier. Though reports suggest that the pending ninth review between IMF and the Pakistan government for the release of $1.18 billion will finally take place this month, the delay has led to concerns for Islamabad.

Notwithstanding the IMF's mandate for the loan programme which was revived in August, Dar went on to reduce prices of petroleum and diesel (Pakistani) by Rs 10 and Rs 7.5 respectively last month. As part of the loan programme, the IMF had mandated Pakistan to increase levy on fuel and eliminate subsidies. An analyst with a ratings agency said that "time is running out for Islamabad."

"After the current finance minister's u-turn on key economic policies which included elimination of subsidies, the uncertainties have risen. It is like the devil and the deep sea you know you urgently need the IMF assistance but at the same time you are trying to play to the gallery," he said, adding that the policymakers are "well aware" of the problems and the solutions. "For Pakistan, the problem is the unwillingness to resolve the pressing issues. They instead focus on non-issues like Kashmir," he said.

"Will Kashmir solve its debt problems? Get real, focus on real issues," he said. Recently, raising the Kashmir issue at the UN Security Council Open Debate, Pakistan's Foreign Minister Bilawal Bhutto Zardari attacked Prime Minister Narendra Modi.

After External Affairs Minister (EAM) S Jaishankar noted that cross border terrorism should not be justified adding that Pakistan even hosted Al Qaeda chief Osama Bin Laden, Bhutto lashed out. "I want to tell India that Osama bin Laden is dead, but the butcher of Gujarat lives and he is the Prime Minister of India," he said.

While hitting back, India said that the comments were a new low, even for Pakistan. "The Foreign Minister of Pakistan has obviously forgotten this day in 1971, which was a direct result of the genocide unleashed by Pakistani rulers against ethnic Bengalis and Hindus. Unfortunately, Pakistan does not seem to have changed much in the treatment of its minorities. It certainly lacks credentials to cast aspersions at India," a statement released by the Ministry of External Affairs said.