Imran Khan is paying the price for Pakistan’s IMF bailout

Protests over spiralling prices are gaining momentum, and the Opposition is using this to its advantage.

WrittenBy:Umer Farooq
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For the past one-and-a-half weeks, the lead story of every news channel in Pakistan has been about the rising price of the American dollar in the open market and the continuous devaluation of the Pakistani rupee. In the open market, the dollar has crossed the unprecedented mark of Rs. 150 per dollar. As expected, this impacted Pakistan’s imports, including the import of military equipment, oil, industrial machinery and a plethora of luxury items that are of daily use by Pakistan’s middle classes.

The rising price of the dollar is the result of an agreement between the Pakistani government and the International Monetary Fund to the effect that the rate of the dollar will be determined by market forces in the open market. As a result of this agreement, Pakistan is expected to receive a bailout package of $6 billion from the IMF during the next three years. However, during the last few days, the price of the dollar in the open market started to stabilise as Imran Khan’s government began giving the final shape to the annual federal budget, which is likely to be announced in the next two weeks. The federal budget is also likely to be bad news for the Pakistani masses, and the cause again will be the IMF bailout package that Pakistan signed with the IMF.  

Quoting official sources, the local media reported that in the first year following the signing of the agreement—the year beginning on July 1—Pakistan will have to generate additional tax revenues of about Rs. 600 billion, raising about Rs. 100 billion from higher-end power consumers. Officials said that Rs. 98 billion of additional cost of power would be recovered from consumers at the rate of an increase in tariff of less than Rs. 1 per unit for consumers using more than 300 units per month—implying that, once again, the middle classes will be targeted.

The expected impact of the rising price of the dollar and the IMF bailout agreement is the storm of price hikes that’s already hit markets in Pakistan. In the process, this has increased the economic hardship of urban middle classes who form the support base to the governing Pakistan Tehrik-e-Insaf (PTI) and its rival and main Opposition party, the Pakistan Muslim League (Nawaz). Anticipating backlash, Prime Minister Imran Khan is now repeatedly asserting that the next two years will be difficult for the common man in Pakistan. Yet his assertions have failed to provide solace to the urban classes in the face of this unprecedented price hike. Opposition parties are also planning an agitation movement after Ramzan.

Two meetings took place in Islamabad over the past week, indicating that everyone’s taking the impending economic crisis and its possible political fallout very seriously. In the first meeting, all the Opposition parties, both religious and secular, decided to launch a protest movement against the Imran Khan government to condemn the IMF agreement, which they’re describing as a sellout. Their focus seems to be on exploiting the anger of the middle classes. The Opposition seems to think that the IMF agreement to withdraw the subsidy on electricity and natural gas bills—thus leading to manifold increase in utility bills for domestic consumers—will provoke the middle classes to come to the streets.

But it’s the second meeting in the power corridors that is far more worrisome for the PTI government. The National Security Committee (NSC) met in Islamabad under the chairmanship of PM Imran Khan, with all three armed forces chiefs in attendance, to discuss the deteriorating economic situation. This is unprecedented, as the NSC had remained focused on security, strategic and military affairs whenever it met during the last nine months of this government. The reason for this meeting is that the largest item on Pakistan’s import bill is usually military equipment purchased from China and the West, meant for the use of the three armed forces. The persistent devaluation of the Pakistani rupee against the dollar is likely to reduce the capacity of the armed forces to continue the purchase of military equipment from abroad.

How this will affect the ostensible political support extended by military leaders to the PTI government is a very sensitive issue.

The government’s overall impression of incompetence was further reinforced when PM Khan forced his party man Asad Umar to resign as finance minister. Pakistani TV channels went into overdrive to broadcast Khan’s speeches during his time as Opposition leader, when he had emphasised that Asad Umar has the capacity to transform Pakistan’s economy in months, if not days.

Khan has appointed a team of financial experts in Umar’s place, reportedly with a reputation of representing international financial institutions and serving their interests in Pakistan. Hafeez Sheikh is now the Adviser to the Prime Minister on Finance, and is often described as a front man of the IMF and Pakistani military at the same time. Similarly, Baqir Raza, the country head of the IMF in Egypt, has been appointed as the governor of the State Bank of Pakistan.  

Opposition members are now demanding the government present the IMF agreement before Parliament for approval, after Pakistani officials signed the agreement in Washington at the conclusion of a prolonged negotiation. After the signing of the agreement, some politicians quipped that this was the first agreement between Pakistan and the IMF where the IMF was negotiating with the IMF itself—an oblique reference to Khan’s decision to hire IMF men in his economic team.

Meanwhile, the unease in the urban middle class has already become visible in the form of small protests in cities against price hikes, especially the increase in electricity bills and fuel charges. The Opposition hopes a large number of people will join their protest movement after Eid. If this happens, Pakistan is likely to see turmoil. “People will curse us if we don’t launch a protest movement right now,” says Rana Sanaullah, a senior MP from the Muslim League.

The Opposition’s push for the protest is also in the hope it will provide relief to its leaders. Former president Asif Ali Zardari and Nawaz Sharif and his family members are under tremendous pressure from the state machinery due to financial corruption charges against them. A shift in focus to the spiralling prices can only work in their favour.

Adding to the country’s political uncertainty is the incident of violence in the tribal area bordering Afghanistan, where at least three peaceful protestors were killed by army troops manning a checkpost in North Waziristan. The army said the checkpost was attacked, while protest leader and MP Mohsin Dawar said they were unarmed and wanted to inquire about the whereabouts of their fellow activists who were arrested by the military a few days ago. The mainstream media completely blacked out the people’s perspective on the incident, airing instead the official version. As a result, Opposition parties came out in support of the protestors, demanding a parliamentary inquiry into the incident. All this has galvanised the atmosphere of protest in the country.

And yet there is still more to this than meets the eye. The Opposition seems to have an eye on Islamabad’s power corridors with its push for the protest movement. Pakistan’s powerful chief of the army staff, General Qamar Javed Bajwa, will retire on November 29, 2019, if Prime Minister Imran Khan doesn’t give him an extension of service. It has become a pattern in Pakistani politics that Opposition parties take to the streets on one pretext or the other as the time for the appointment of a new army chief approaches. Imran Khan as Opposition leader did the same in November 2016 at the time of General Bajwa’s appointment as army chief. The present Opposition parties are likely to continue the tradition of exerting pressure on the incumbent government while it takes the decision to appoint a new army chief or to give an extension to the incumbent one.

Political commentators in Pakistan are doubtful about the capacity of the present Opposition parties to mobilise lower classes in urban areas, which have already played a crucial role in protest movements in the country’s history. Middle classes usually stay away from violent protests. However, experts also say it doesn’t require a mammoth crowd to disrupt the already congested urban centres of Pakistan. The Opposition only has to assemble a couple thousand people to disrupt the civic life in Pakistan—which they are fully capable of doing.


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