Granted, taking loans is something not to be proud of. But if the glass is half full, the willingness of lenders to give you loans “qualifies” you worthy of repayment, in their point of view. Many countries, Argentina, Venezuela & Ukraine have had economic crises worse than Pakistan. The “tough” budget certifies that Pakistan wants to “fix the house”.
First, it was freeze in government salaries. Lenders argue “if developed countries can do it” & “charity begins at home”. Correct. But the real inflation in Pakistan has been much higher. We conceded nonetheless.
Similarly, we were expected to reduce Primary Deficit to 0.4% & increase tax revenues to Rs 4.9tn. An impossible feat in current dynamics but we aimed/hoped for it. The idea was to keep lenders assured that macroeconomic restructuring is continuing.
Because of the “continuity”, $1.5bn inflows from World Bank, ADB & AIIB, IMF post 2nd review disbursement of ~$450mn & $2.4bn in debt relief have been secured. Imprudence could jeaoparidised stability. Improvement in the FX reserves may restore PKR stability near Rs165, hopefully.