According to the media reports, the government has launched a ‘bail me out’ offensive to avoid a new bailout package from the International Monetary Fund. This is the classic example of financial failure as the government had earlier depreciated the Pakistani rupee to prop up the falling exports and minimize the trade deficit. But it simply did not work and now it is looking toward Saudi Arabia, China and other friendly countries for loans and grants to continue its business as usual in the operational mode. The government has already started feeling the heat of the rupee’s meltdown and seeks at least $8 billion to get a breathing space. It is naïve to believe that the friendly countries are prepared to lend their extra money to Pakistan without working out any modalities less tough than the IMF. Another failure is the signing of free trade agreements with various countries without deeply understanding the needs and requirements of the nation. As a result, the balance of trade always remained in favour of other countries. Allowing the trade in dollar also created additional troubles for the national economy and trade deficit even with Beijing reached $12.5 billion during the last fiscal year.
Economists believe the government would make maximum effort to avoid any bailout package from the IMF. Instead, it will opt for short term commercial borrowings of $10 billion from various creditors as well as from the Chinese banks. Reports suggest the tapping of Eurobond is also on the table but the government is weighing options to take a decision after observing trends in the international bond market. The Prime Minister’s Adviser on Finance has also ruled out any possibility of requesting the IMF for a new bailout package in spring meetings of Breton Wood Institutions scheduled to be held next month. The government has already raised $1.77 billion through short term commercial borrowings in first eight months of the current fiscal year. Keeping in view the current state of financial affairs, the future of the economy appears bleak and disappointing. However, the only ray of hope is China Pakistan Economic Corridor and the proposed industrial zones alongside the project. Pakistan and China are trusted friends and are cooperating in various fields of economy. The success of cooperation is in the interest of both countries, especially for Pakistan. Otherwise, nothing can stop Pakistan from knocking the door of the IMF.
