‘It’s a nuance, but an important nuance’

The outgoing Shehbaz Sharif-led government is deriving a lot of pleasure, pride and satisfaction from the fact that it had finally successfully persuaded the International Monetary Fund (IMF) to unlock its bailout to help the country avert sovereign default.

It is true that the lender of last resort did help propel a beleaguered economy through a $3 billion Stand-By Facility (SBA). What is also true in this regard is the fact that the IMF was required to do what it did recently whether or not the country had strayed from the economic path the former had delineated for the latter.

For example, Izabella Kaminska, in her article “Why you can’t default on the IMF” carried by the Financial Times, has provided all and sundry with an interesting insight into IMF’s approach or approaches to lending. According to her, “It’s a nuance, but an important nuance.

The IMF isn’t a creditor in the usual sense of the word. It’s a collateralised bilateral swap agent that exists to help countries balance international payment obligations so that they don’t have to start wars, grab resources or asset-strip trade partners when they abuse their trust.

The clue comes in the ‘F’ of the IMF acronym, which of course stands for fund not force….” True. Pakistan, therefore, has a special relationship with the IMF because not only is this country a sovereign state, it is also one of the nine states in the world with nuclear weapons.

Therefore, the world powers or institutions, including IMF, will never allow Pakistan to default; they would always lend a helping hand to this South Asian nation to successfully avert default or default-like situation or situations.

Mehrunnisa Qizlibash

Peshawar

Copyright Business Recorder, 2023