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IMF advised Pakistan to have a broader political consensus

07 March, 2018

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ISLAMABAD: The International Monetary Fund (IMF) has advised Pakistan to have a broader political consensus on critical structural reforms to address economic challenges in taxation, energy and public sector enterprises.

“Economic future of Pakistan is the collective responsibility of all political parties,” said a senior official close to the IMF as Ms Teresa Daban replaced Tohikr Mirzoev as Resident Represen­tative of the Fund in Islamabad.

The official said finding a broad political consensus will be critical for the success of structural reforms in the country and separating politics from key components of economic agenda remained a challenge. This was evident from obstacles to reforms in the energy taxation and public sector enterprises emerging from lack of political consensus.

The fund believed the political consensus would be vital for the “successful and sustainable” structural reforms whether they are in the government or the opposition. The earlier they agree on the key economic issues the better it would be for the country.

Unless that was achieved, it did not matter how many bailout packages Pakistan secured the structural reforms in energy, tax compliance and privatisation would remain unsustainable.

The general impression from the IMF was that whatever reform process the country had initiated under the $6.64 billion Extended Fund Facility had either been stopped, slowed down or reversed due to lack of political ownership soon after the programme ended in September 2017 and the country appeared to be reverting to 2013 position.

Officials refused to take the blame for not being able to pursue reforms programme, saying at the end of the day the fund was a financial institution and change had to come from within while fund could only provide a helping hand. This is not the first time rather it has been happening for the last 20 years and the question has always been how to initiate and execute structural reforms.

They said that the question was not how strong or soft the IMF had been during all its programmes, the real question was how sincere political leadership had been in implementing or taking ownership for economic reforms.

Responding to a question, the official said despite having 17pc share in the IMF, it was difficult for the US to influence IMF and a member-based institution could not deny assistance on political grounds. “The board and staff work has been separated to a large extent”.

Officials said the IMF has already pointed out that current fiscal year will be a difficult year for Pakistan in terms of balance of payments position and hence the IMF programme would not be blamed for failure of economic reforms needed to put the country on a path to sustainable growth.

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