The Hindu Editorial Vocabulary– Feb 13, 2022; Day 402

Cyclical troubles: On IMF bailout (A rescue, esp. a rescue from financial difficulties) for Pakistan

Pakistan pins its hopes on (to hope very much for a good outcome from (something or someone) especially when other options are not available or are not pursued) another International Monetary Fund bailout to stave off (Prevent the occurrence of; prevent from happening; to protect from or to keep away anything undesirable; to ward off) the economic crisis

After 10 days of talks with the Pakistan government, an IMF delegation left Islamabad on February 9 without a concluding statement either on its review of an existing $7 billion loan programme or on a fresh tranche (A portion of something (especially money)) of loans to help the distressed economy. The Shehbaz Sharif-led government insisted that this was standard process and that the country would expect a loan tranche after the IMF’s completed its internal process were complete but the desperation was also evident in the government reportedly agreeing to fresh taxes, reducing subsidies and increasing levies on fuel consumption to meet the IMF’s expectations. Economic distress is deepening — power blackouts (The failure of electric power for a general region) persist even in urban areas, annual inflation was at 27.5% in January (its highest since 1975), the Pakistani rupee has fallen to nearly 270 a dollar and forex reserves have fallen below $3 billion, the lowest since February 2014, threatening a balance of payments (A system of recording all of a country’s economic transactions with the rest of the world over a period of one year) crisis. The effect of last year’s debilitating (Impairing the strength and vitality) floods continues to weigh on (Be oppressive or disheartening to) the economy with thousands still homeless, agricultural land destroyed and many people without adequate food. The perilous (very dangerous) state of the economy explains the desperation for yet another IMF bailout, which would be the sixth such facility the agency extended since 2000, and which seems inevitable as this would stave off the balance of payments issues, with complementary support from traditional allies in West Asia and also China.

The effect of the COVID-19 pandemic and the floods notwithstanding (Regardless of), the cyclical nature of the economic issues and the country’s repeated reliance on IMF packages during crises point to a failure of governance. While import dependency, low export competitiveness and poor fiscal management are proximate (nearest in time, order, etc. to something) reasons for the recurring crisis in a shock vulnerable economy, it must also be said that this is an indirect outcome of the absence of an unrestrained run of power for civilian democracy in a country where the military has a preponderant (Having superior power and influence) role. With elections due later this year, little trust remaining between the key political parties and the military seeking to meddle (Intrude in other people’s affairs or business; interfere unwantedly) in the political process, things do not forebode (Make a prediction about; tell in advance) too well for the country. Unless the governance structures refocus themselves to addressing long-term structural weaknesses in the economy and find ways to improve relations with neighbours such as India, the cyclicity of the economic problems will remain. But for that to happen, the military establishment has to take a back seat: a bleak (Offering little or no hope) prospect in the medium term.

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