Govt confuses investors as ministers send mixed messages: MG Opinion

October 10, 2018 (MLN): Government of Pakistan has given a green signal to approach the International Monetary Fund (IMF) for an estimated $9 billion bailout package. Finance Minister Asad Umar has left for Bali, Indonesia where he will hold talks with the IMF representatives and negotiate the terms and agreement of the bailout. The decision was taken after much delay as State Bank of Pakistan (SBP) foreign exchange reserves have fallen to four-year lows providing just 46-days’ worth of import cover.

However, the tall promises made by PTI before elections on never to approach the IMF with a begging bowl have brought them severe political rebuke from their decision to ask IMF for a bailout. In order to save political capital, government’s representatives have started holding press briefings to ensure the blame is on the previous government; the usual norm in Pakistani politics.

These briefs have confused investors who are visibly perturbed over the confusing remarks made by the government officials in different settings. They have continued to bear with some bizarre claims from the Prime Minister Imran Khan’s who vowed to bring back looted wealth, appeal overseas Pakistanis to donate into the country and cutting back on costs – selling buffaloes etc – to fix the economy.

Reviewing Finance Minister’s public statements, he was not amply convinced with PM’s claims of bringing back looted wealth or decreasing government’s costs to help fix the economy. He has been meeting with lenders – China, Saudi Arabia, and IMF delegations – and also with bankers from across the world to raise funds for the government. The eight per cent decline in stock market during the last seven served as the tipping point for the government who had to take some step to stop the market from receding further.

Furthermore, Foreign Minister Shah Mahmood Qureshi while speaking to foreign press in United States suggested that the government is actively looking into an IMF led bailout. The minister was answering a question from a journalist when he said that “the last government promised that this is the last time we are heading to IMF but look where we are heading now” echoing the IMF bailout.

These mixed messages from the top ministers of the country have led extreme confusion in the Business community.

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