IMF bailout

THE Prime Minister and his Finance Adviser have been engaged in talking up the IMF loan that the country has received as a result of their negotiations, at a time when the long-awaited Friends of Pakistan meeting has finally taken place in Abu Dhabi on Monday, and dispersed without deciding on the dole that the government wants, merely deciding on another meeting at the ministerial level. Prime Minister Yusuf Reza Gilani naturally focused on relief measures for the Balochistan earthquake during his press conference in Quetta, but he did find the opportunity to say that the IMF package was entered because of the current crisis, but would bring fiscal discipline. As if expanding on this, his Finance Adviser, Shaukat Tarin, while giving an interview to Waqt TV, talked about the conditions that the IMF had imposed. One condition was that the government cut State Bank borrowing to zero. Obviously, the Prime Minister had this in mind. It means that if the government must borrow, it must do so from the commercial banks, which will prove very different from the State Bank, which is compelled to lend, even if it has to print money to do so. The IMF has also demanded that oil payments should not be made through the State Bank, which would strengthen the rupee. These two measures would ease the life of the State Bank, but the IMF's insistence that tax revenue be increased will not, especially when the new sectors brought into the tax net is agriculture, the stock market and real estate, which presently all enjoy some form of exemption.