The price of the facility

The announcement that Pakistan would receive an IMF facility worth $7.6 billion has been greeted more with relief rather than joy. The relief has been caused by the reality that without the IMF money, Pakistan was likely to default on its sovereign debt, and was possibly going to welsh for the first time on money, which it owed. Particularly worrying for Pakistan's fund managers was an old bond issue, which was due for repayment.
Unfortunately, this is not the first time that Pakistan has been in this condition, though it is probably the first time that the possibility of default has not been raised. Interestingly, the country's economic managers and its leaders have tried to raise this prospect, because the last time Pakistan came close to default, around the time of the South Asian financial crisis, it was as part of a doomsday scenario, whereby the collapse of any state could cause the collapse of the whole banking system. Now, it seems, though no sovereign country has yet gone under, the prospect of one actually doing so is not so frightening, probably because a number of large banks, normally the most reliable of financial players, have gone under, leaving the financial markets still functioning.
It is perhaps an irony of fate that it is a PPP government that takes Pakistan into an IMF programme. The last time that Pakistan went into an IMF programme, for three years that got extended by the granting of a fresh programme, was under the first Benazir government. It was the beginning of a decade of IMF programmes, that also made the life of both Nawaz governments miserable, and that only ended with 9/11 and the West's need of Pakistan. It is therefore a safe prediction that the IMF is here for some time.
The problems it thinks it has been engaged for, the balance of payments crisis, the energy crises, the food crisis, and the persistent inflation, will not go away any time soon, not even with IMF ministrations. Actually, it has only been engaged because the government wants the immediate crisis tided over, and as soon as this happens, in the estimation of the government, not the IMF, it will see the defects of being in an IMF programme which it does not at present. The government has had to deal with a lot of anti-IMF feeling it did not face the last time around, and which have been caused by the previous experience. There is no real indication that the IMF is better staffed this time, by economists with better degrees from better universities, than when it plunged into the Asian crisis.