Will Pakistan Reform Under IMF Pressure?

For the $6-billion loan, Pakistan has to adhere to stiff conditions. But Imran’s focus isn’t on tackling the economic mess.

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It’s long been accepted that Pakistan’s army chief is the country’s most important power-broker who calls the shots. But in the coming months, there may be another crucial figure who’ll wield clout behind the scenes. His name is Reza Baqir who was with the IMF nearly 20 years and who now has been parachuted into the top job at Pakistan’s central bank.

Baqir’s unenviable task during the next three years will be to keep a tight watch on Pakistan’s economic manoeuvres and to ensure it complies with toughest conditions ever set by the IMF for its latest $6-billion bailout. Abiding by the IMF’s terms will be all the more difficult because there’s no indication of Imran Khan, whose government just marked its first anniversary, showing any sign of comprehending, or tackling, the country’s deep economic mess. On the contrary, Khan has focussed on raising the temperature against India over Kashmir and, instead of sabre-rattling, he’s now nuke-rattling to attract the world’s attention.

Can Pakistan hike taxes and ensure many more of its elite are forced into the tax net? (Pakistan with its 217 million population has 1.5 million taxpayers. Compare that with Bangladesh which, with its 168 million population, has 1.6 million taxpayers). Also, can it raise electricity prices and push up exports enough to narrow its trade deficit? Can it reduce its overall budget deficit? Can it move to a “market determined” exchange rate? These are all changes the IMF wants to see in exchange for its money.