Former Prime Minister Shahid Khaqan Abbasi’s recent remark, suggesting that returning to the IMF for another bailout program signifies the “government’s failure,” while not entirely incorrect, prompts two immediate questions.
Firstly, did he express the same sentiment to the government during his tenure, considering he held the highest office in the country within that administration? Many Pakistanis wonder if the borrowed funds were ever utilized to generate revenue, as Abbasi implied at the Asma Jahangir Conference in Lahore. The only time honest answers emerge is when politicians like Abbasi are out of power, conveniently changing their stance on the necessity of IMF bailouts. Therefore, an ex-leader discrediting another IMF program is consistent with a well-established pattern.
Secondly, as a former prime minister who is no longer affiliated with his previous party, one wonders if Abbasi is merely another pawn on the political chessboard. This speculation arises amidst ongoing political turmoil, with the country’s major political party facing scrutiny, a disputed election leading to the current government formation, and the emergence of new political factions.
Pakistan has consistently failed to capitalize on past bailout programs, a fact Abbasi is well aware of from his time in government when several were initiated and subsequently abandoned. The economy suffered not solely due to the severity of IMF structural adjustments but due to their incomplete implementation. This cycle of opposition criticism and government pursuit of IMF programs persists.
The urgent need for an Extended Fund Facility (EFF) is undeniable. It is crucial for generating fiscal space and averting default. Without an active IMF program, the impending debt repayments, including approximately $30 billion due next year, pose a significant risk of default, leading to loss of market confidence and economic turmoil.
A representative government capable of making tough decisions is imperative to address such challenges effectively. This approach would legitimize the government, reduce political noise, and instill confidence in its ability to negotiate and implement IMF programs in the future.
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