The IMF has agreed to break Pakistan’s fall. Again

FAMILIARITY, THEY say, breeds contempt. Few countries are as familiar with the IMF as Pakistan, which has previously obtained 21 loans from the fund, as many as Argentina. On May 12th this familiarity deepened further. The government, led by Imran Khan, a former cricketer who heads the Pakistan Tehreek-e-Insaf party, said it had reached a deal to borrow $6bn more over three years. The agreement now awaits formal approval from the fund’s bosses in Washington and the support of other international lenders, including the World Bank and Asian Development Bank.

The loan will relieve Pakistan’s dollar shortage but do little to improve the IMF’s standing in the country. In return for its money, the fund expects the government to raise tax revenues and utility prices, impose discipline on provincial spending—and let the currency fall, if need be. That will help narrow Pakistan’s wide trade and budget deficits. But it will also curb growth and increase inflation in the short term.

Targets include cutting the budget deficit (before interest payments) to 0.6% of GDP next fiscal year (which starts in July) from the 1.9% that the IMF reportedly expects for this year. The government has talked about removing tax breaks worth about 350bn rupees ($2.5bn or 1% of GDP) and raising the price of...

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