The politics of IMF came full circle on Friday, marking the end of a chapter that opened up with the coalition government taking office in April last year. The road to the elections now looks clear.
This road, though, has not been easy to traverse for the man who has had his hand on the steering wheel. Today, he can look back and allow himself a smile. As someone who watched Prime Minister Shehbaz Sharif from close quarters as he navigated these treacherous waters, one can say with a fair degree of confidence that the Standby Agreement announced by the IMF is a personal triumph for the PM. The story of how he stayed the course through deeply uncertain times merits a detailed telling, but one that will have to wait for another day. Today, some political context.
The saga of the IMF program runs like a common thread between the PTI and PDM governments and provides a sharp backdrop to all the economic and political travails of recent years. In fact, the question of whether to go or not to go to the IMF formed the core of debates that raged inside the ruling coalition circles in the early weeks after the ouster of the Imran Khan government. The parameters of these debates were framed around three key questions:
First, could the coalition bear the political cost of returning to the IMF by fulfilling requirements that the PTI government had absconded from?
Second, could the coalition trust the then Establishment to ensure the completion of the full 16-month tenure and not force an early election?
Third, could the coalition bear the steep cost of an IMF program and yet manage to stabilize the economy enough to have decent electoral prospects by August 2023?
READ MORE: Breakthrough With IMF To Provide Some Economic Relief
These three questions kept the coalition unsettled in the absence of clear and categorical decisions. The events of May 2022 and the insistence of the PTI chairman to embark on a long march even when conveyed that the government was agreed on dissolving the National Assembly set in motion new dynamics that pushed both the PDM and the PTI towards an uncertain future.
In these early days, some very influential people within the PML-N were insistent on opting for fresh elections instead of opting for the IMF. Once Imran Khan had blundered into his disastrous long march in the last week of May 2022, and the government had decided not to go through with the dissolution of the National Assembly, the anti-IMF lobby should have held its peace. It did not. Not even when an overwhelming majority of economic experts advised the government that opting for the IMF was not a choice but a necessity.
It was a painful necessity. The first petrol price hike was a punch in the gut for the government, and many within the coalition – both inside and outside the federal cabinet – howled in protest. It was a natural reaction coming from constituency politicians. The government decision-makers appealed for patience.
By late May and early June 2022, the IMF issue had come bang center in the turbulent politics of the country. But this politics had become so complex - through an interplay of multiple completing interests - that sifting economic requirements from political considerations was becoming almost impossible. In the eye of this storm – facing the brunt from all sides – was one man: Prime Minister Shehbaz Sharif.
By the time of the federal budget in June 2022, the PM had been in office for exactly two months (he was sworn in on April 11). For six of these eight weeks, he was not sure whether his government was staying or going. The final decision to stay came on Sunday, May 22, when Imran Khan – against the advice of people like Shah Mehmood Qureshi – announced May 25 as the date for the long march. It was at this moment that the coalition government finally made up its mind to finish the full term till August 2023.
That left PM Shehbaz and his finance minister Dr. Miftah Ismail about two weeks to stitch together the federal budget. The cerebral debates that took place between the two gentlemen over the fundamental contours of the budget were instructive for those who sat around that table. This was work under pressure. Real pressure.
READ MORE: Malice Towards None & All: 2024 Budget Is Devoid of Innovative Measures
In fact, as it so happened, the PM was by this time navigating at least four challenges simultaneously. They were the challenge of governance within the ambit of an economic crisis, the challenge of leading a disparate coalition with competing interests and sensitivities, the challenge of engaging with the Establishment that had just suffered a messy breakup with Imran Khan; and the challenge of dealing with competing power centers within the party and the subtle dynamics of the family.
With these four fault lines providing a somber backdrop for his strategic and tactical decisions, PM Shehbaz knew full well that his stint in the highest office of the land and the electoral prospects of his party and the coalition would be determined by the state of the economy. The state of the economy was dependent on the IMF deal. The IMF deal would bring more pain to the people. The pain would make it all the more difficult for him to navigate the four fault lines. It was a circular predicament. There were no good answers. There were no good choices. The cross was his to bear – and his alone.
In Dr. Miftah Ismail, the PM had a finance minister who matched his clarity about the IMF deal. Having presented the budget on June 10, 2022, Dr. Miftah rolled up his sleeves and zeroed in on getting the IMF deal sealed. But the long hot summer months from June to September 2022 were producing a political, social and economic churn that made his task, and that of his PM, much harder than could have been imagined. The desperately needed clarity about the IMF deal was gradually being enveloped in the haze of a political sandstorm.
In fact, it was a perfect sandstorm, so to speak, of crises for the PM and his government. Imagine the inflammable combination: Imran Khan has swept the July by-polls, thereby delivering a shock defeat to the ruling coalition; inflation is skyrocketing with fuel prices galloping away from citizens’ reach; the Establishment is giving mixed signals with whispers of the Army Chief’s extension growing louder; and the PTI juggernaut appears to be growing stronger with each successive blockbuster rally.
And yet, despite being battered by these headwinds, the PM and his finance minister kept pushing for the IMF deal. Every time Dr. Miftah or his finance secretary would share the details of tortuous IMF negotiations with the PM, he would grimace. But it was a bitter pill that needed to be swallowed.
Or did it?
In September, there was a change of leadership at the finance ministry, with Ishaq Dar replacing Dr. Miftah for reasons that must await another time. Given Dar’s stature within the party and his position as the ‘go-to-guy’ for the economy, the PM took a step back to focus more on political and governance matters that required urgent attention. The change of command at GHQ, or the extension of the incumbent, had by October 2022 become the most crucial and difficult decision for the government. Those weeks leading up to the end-November date saw unprecedented activity behind closed doors. Most details remain undisclosed till date, though bits and pieces have surfaced in writings and guarded statements.
Meanwhile, on the economic front, there was little to cheer about as the rupee continued to slide against the dollar, and the IMF deal remained agonisingly elusive. There were a few occasions when the PM stepped in to speak to the IMF leadership, but the gap between the two sides could not be narrowed in any substantive way. With the appointment of the new army chief in end-November, the focus of the coalition reverted back to the economic situation. Rising dollar rates, dwindling foreign exchange reserves and a ban on opening new LCs meant the economy was now in severe trouble. The fear of default appeared very real.
As 2023 rolled in and Imran’s popularity continued to surge, there was serious concern among the coalition partners that they were stuck in a political quagmire. The Establishment appeared quiet, the economy looked unrepairable, and the PTI seemed unbeatable. As is common in such perilous situations, people looked for scapegoats. The PM was the easiest to blame. While no one would say so openly, there were murmurings from within the coalition parties as well as his own that the PM could not get a grip on things. All appeared lost.
READ MORE: The Mighty Must Fall, Again
But not really.
In his unassuming way, the PM had managed to quietly accomplish three things that would define what would happen between February and May 2023.
First, he succeeded in building a strong working relationship with the new Army Chief General Asim Munir, and this manifested itself in regular in-person meetings between the two for deep consultations.
Second, he strengthened his position within the coalition set-up through constant engagement with Asif Zardari and Maulana Fazlur Rehman. Even within the cabinet, the PM would often depend more on some coalition ministers than his own party’s leaders.
And third, he re-asserted himself on the economic front.
In retrospect, all three have paid political dividends.
The events of May 9 have brought the Establishment back into the centre of things. The implosion of ‘Project Imran’ in a shockingly short period has benefited the ruling PDM coalition beyond their wildest dreams, but truth be told, the PDM had little to contribute to it. That credit lay somewhere else.
But for holding the coalition together in these tumultuous times and for almost single-handedly dragging Pakistan and the IMF into another desperately needed deal, the credit goes to only one man. The PM is entitled to his smile.
(The writer is a political commentator. He tweets at @fahdhusain)
This road, though, has not been easy to traverse for the man who has had his hand on the steering wheel. Today, he can look back and allow himself a smile. As someone who watched Prime Minister Shehbaz Sharif from close quarters as he navigated these treacherous waters, one can say with a fair degree of confidence that the Standby Agreement announced by the IMF is a personal triumph for the PM. The story of how he stayed the course through deeply uncertain times merits a detailed telling, but one that will have to wait for another day. Today, some political context.
The saga of the IMF program runs like a common thread between the PTI and PDM governments and provides a sharp backdrop to all the economic and political travails of recent years. In fact, the question of whether to go or not to go to the IMF formed the core of debates that raged inside the ruling coalition circles in the early weeks after the ouster of the Imran Khan government. The parameters of these debates were framed around three key questions:
First, could the coalition bear the political cost of returning to the IMF by fulfilling requirements that the PTI government had absconded from?
Second, could the coalition trust the then Establishment to ensure the completion of the full 16-month tenure and not force an early election?
Third, could the coalition bear the steep cost of an IMF program and yet manage to stabilize the economy enough to have decent electoral prospects by August 2023?
READ MORE: Breakthrough With IMF To Provide Some Economic Relief
These three questions kept the coalition unsettled in the absence of clear and categorical decisions. The events of May 2022 and the insistence of the PTI chairman to embark on a long march even when conveyed that the government was agreed on dissolving the National Assembly set in motion new dynamics that pushed both the PDM and the PTI towards an uncertain future.
In these early days, some very influential people within the PML-N were insistent on opting for fresh elections instead of opting for the IMF. Once Imran Khan had blundered into his disastrous long march in the last week of May 2022, and the government had decided not to go through with the dissolution of the National Assembly, the anti-IMF lobby should have held its peace. It did not. Not even when an overwhelming majority of economic experts advised the government that opting for the IMF was not a choice but a necessity.
It was a painful necessity. The first petrol price hike was a punch in the gut for the government, and many within the coalition – both inside and outside the federal cabinet – howled in protest. It was a natural reaction coming from constituency politicians. The government decision-makers appealed for patience.
By late May and early June 2022, the IMF issue had come bang center in the turbulent politics of the country. But this politics had become so complex - through an interplay of multiple completing interests - that sifting economic requirements from political considerations was becoming almost impossible. In the eye of this storm – facing the brunt from all sides – was one man: Prime Minister Shehbaz Sharif.
By the time of the federal budget in June 2022, the PM had been in office for exactly two months (he was sworn in on April 11). For six of these eight weeks, he was not sure whether his government was staying or going. The final decision to stay came on Sunday, May 22, when Imran Khan – against the advice of people like Shah Mehmood Qureshi – announced May 25 as the date for the long march. It was at this moment that the coalition government finally made up its mind to finish the full term till August 2023.
Sifting economic requirements from political considerations was becoming almost impossible
That left PM Shehbaz and his finance minister Dr. Miftah Ismail about two weeks to stitch together the federal budget. The cerebral debates that took place between the two gentlemen over the fundamental contours of the budget were instructive for those who sat around that table. This was work under pressure. Real pressure.
READ MORE: Malice Towards None & All: 2024 Budget Is Devoid of Innovative Measures
In fact, as it so happened, the PM was by this time navigating at least four challenges simultaneously. They were the challenge of governance within the ambit of an economic crisis, the challenge of leading a disparate coalition with competing interests and sensitivities, the challenge of engaging with the Establishment that had just suffered a messy breakup with Imran Khan; and the challenge of dealing with competing power centers within the party and the subtle dynamics of the family.
With these four fault lines providing a somber backdrop for his strategic and tactical decisions, PM Shehbaz knew full well that his stint in the highest office of the land and the electoral prospects of his party and the coalition would be determined by the state of the economy. The state of the economy was dependent on the IMF deal. The IMF deal would bring more pain to the people. The pain would make it all the more difficult for him to navigate the four fault lines. It was a circular predicament. There were no good answers. There were no good choices. The cross was his to bear – and his alone.
In Dr. Miftah Ismail, the PM had a finance minister who matched his clarity about the IMF deal. Having presented the budget on June 10, 2022, Dr. Miftah rolled up his sleeves and zeroed in on getting the IMF deal sealed. But the long hot summer months from June to September 2022 were producing a political, social and economic churn that made his task, and that of his PM, much harder than could have been imagined. The desperately needed clarity about the IMF deal was gradually being enveloped in the haze of a political sandstorm.
It was a circular predicament. There were no good answers. There were no good choices. The cross was his to bear – and his alone
In fact, it was a perfect sandstorm, so to speak, of crises for the PM and his government. Imagine the inflammable combination: Imran Khan has swept the July by-polls, thereby delivering a shock defeat to the ruling coalition; inflation is skyrocketing with fuel prices galloping away from citizens’ reach; the Establishment is giving mixed signals with whispers of the Army Chief’s extension growing louder; and the PTI juggernaut appears to be growing stronger with each successive blockbuster rally.
And yet, despite being battered by these headwinds, the PM and his finance minister kept pushing for the IMF deal. Every time Dr. Miftah or his finance secretary would share the details of tortuous IMF negotiations with the PM, he would grimace. But it was a bitter pill that needed to be swallowed.
Or did it?
In September, there was a change of leadership at the finance ministry, with Ishaq Dar replacing Dr. Miftah for reasons that must await another time. Given Dar’s stature within the party and his position as the ‘go-to-guy’ for the economy, the PM took a step back to focus more on political and governance matters that required urgent attention. The change of command at GHQ, or the extension of the incumbent, had by October 2022 become the most crucial and difficult decision for the government. Those weeks leading up to the end-November date saw unprecedented activity behind closed doors. Most details remain undisclosed till date, though bits and pieces have surfaced in writings and guarded statements.
Meanwhile, on the economic front, there was little to cheer about as the rupee continued to slide against the dollar, and the IMF deal remained agonisingly elusive. There were a few occasions when the PM stepped in to speak to the IMF leadership, but the gap between the two sides could not be narrowed in any substantive way. With the appointment of the new army chief in end-November, the focus of the coalition reverted back to the economic situation. Rising dollar rates, dwindling foreign exchange reserves and a ban on opening new LCs meant the economy was now in severe trouble. The fear of default appeared very real.
As 2023 rolled in and Imran’s popularity continued to surge, there was serious concern among the coalition partners that they were stuck in a political quagmire. The Establishment appeared quiet, the economy looked unrepairable, and the PTI seemed unbeatable. As is common in such perilous situations, people looked for scapegoats. The PM was the easiest to blame. While no one would say so openly, there were murmurings from within the coalition parties as well as his own that the PM could not get a grip on things. All appeared lost.
READ MORE: The Mighty Must Fall, Again
But not really.
In his unassuming way, the PM had managed to quietly accomplish three things that would define what would happen between February and May 2023.
First, he succeeded in building a strong working relationship with the new Army Chief General Asim Munir, and this manifested itself in regular in-person meetings between the two for deep consultations.
Second, he strengthened his position within the coalition set-up through constant engagement with Asif Zardari and Maulana Fazlur Rehman. Even within the cabinet, the PM would often depend more on some coalition ministers than his own party’s leaders.
The PM was the easiest to blame. While no one would say so openly, there were murmurings from within the coalition parties as well as his own that the PM could not get a grip on things. All appeared lost
And third, he re-asserted himself on the economic front.
In retrospect, all three have paid political dividends.
The events of May 9 have brought the Establishment back into the centre of things. The implosion of ‘Project Imran’ in a shockingly short period has benefited the ruling PDM coalition beyond their wildest dreams, but truth be told, the PDM had little to contribute to it. That credit lay somewhere else.
But for holding the coalition together in these tumultuous times and for almost single-handedly dragging Pakistan and the IMF into another desperately needed deal, the credit goes to only one man. The PM is entitled to his smile.
(The writer is a political commentator. He tweets at @fahdhusain)