akistan has finally managed to secure a staff level agreement with the International Monetary Fund (IMF) for a stand-by arrangement. The ruling coalition sees this as an opportunity to revive its political fortunes.

After much talk of potential default on external payments and its scary aftermath, there is apparent relief for those fearing the worst. However, some bumps are still likely on the road to economic recovery. This has already been pointed out by international credit rating firms. However, for now, no one can stop the Pakistan Democratic Movement government from claiming success.

The IMF issued a press note on June 29 that said, “The IMF staff and the Pakistani authorities have reached a staff-level agreement on policies to be supported by a Stand-By Arrangement (SBA). The staff-level agreement is subject to approval by the IMF Executive Board, with its consideration expected by mid-July.”

Later, Prime Minister Shahbaz Sharif announced that the meeting with the IMF would be held on July 12. He said the meeting was expected to approve the release of the first tranche under the SBA. He also said he wished that this should be the last time such assistance from the IMF was needed.

Under the SBA, the IMF will release $3 billion over the next nine months. Pakistan needed the deal to persuade other lenders to continue supporting it. It had been told by several partners that a clean chit from the IMF was required before more financing could be considered. Some leaders of the ruling coalition believe that the deal will also restore their political credibility ahead of the upcoming general elections.

The agreement can only bring temporary relief to the national economy. It will get us $3 billion. However, Pakistan has to pay off $25 billion during the current fiscal year.It will thus need to enhance its revenue and ask all its friends for assistance.

Moody’s and Fitch, the international rating companies, have also warned that Pakistan will need more funds than what it will receive from the IMF to meet its obligations. “Pakistan will require significant additional financing besides the IMF disbursements to meet its debt maturities and finance an economic recovery,” said Krisjanis Krustins, director of sovereigns for the Asia Pacific region at Fitch while talking to Bloomberg.

The Shahbaz-led government had been desperately trying to reach an agreement with the IMF since it came to power in 2022. It took several difficult decisions to comply with the IMF’s conditions. At the same time, the people of Pakistan were hit hard by the depreciation of rupee against the US dollar, restrictions on imports and unprecedented hike in the consumer price index.

The government had been trying desperately to reach an agreement with the International Monetary Fund since it took over power in 2022. It took several difficult decisions to persuade the IMF. Some leaders of the ruling coalition believe that the deal will restore a measure of political credibility for them ahead of the general elections.

The government sought to present a poor-friendly budget. However, it later announced a supplementary fiscal policy that added to the tax burden of many. The government has also raised the gas and power tariffs. These measures have not only affected the masses directly but also resulted in a further increase in the prices of essential commodities.

It seems that while in financial terms the government has achieved a temporary respite, in political terms, it has gained nothing. Predictably, most people are not concerned with the technicalities. They just want a respite from theirmisery. Around 50 percent of Pakistan’s population is now living below the poverty line.

The News on Sunday (TNS) reached out to various groups of citizens to gauge their views on the IMF deal.

Uzma Ali, 60, a housewife, says, “I am a supporter of the Pakistan Muslim League-Nawaz. I honestly feel that the party should have declined the opportunity to form the government. The government has failed to provide any relief. I find it more difficult to run my kitchen now that electricity and gas bills take away so much.”

Shah Zaman, 35, a bank officer, says, “I won’t vote for any of the PDM components because the coalition government has done nothing good. It has only served to increase our miseries. My father used to vote for the Pakistan Peoples Party and I have been voting for the PML-N. In the next elections, however, I will not vote for the PDM parties. I will choose someone else.”

Ali Imran, 43, a manager in a private bank,says, “What does the IMF deal has to do with my life? Last month, I received a gas bill for Rs 3,300 despite the massive load-shedding. This month with the same level of gas use and load-shedding my bill is Rs 18,000. I have visited the gas company’s office with a complaint but nobody is willing to listen to me.”

It has been observed that the provincial governments have failed, particularly in the Punjab, to control the prices in the markets. Fruit and vegetable vendors are overcharging and there are no checks. This scribe went to a fruit and vegetable shop in BhattaChowk. An official rate list was pasted on a blackboard outside the shop. However, the rates charged by the vendor were different. Asked to explain the disparity, the vendor said, “If you want to buy something here, you can buy at the prices I tell you. Otherwise, you can go someplace else and try to find somebody who charges the official rates.”

The reality on the ground indicates that the PDM has paid a lot politically in order to save the economy. Elections are expected between November 2023 and March 2024. The PML-N is already losing its grip on its stronghold, the Punjab. It has to take some major steps, including the return of Nawaz Sharif, in the coming days in order to retain its political legacy.

The writer is a senior journalist, teacher of  journalism, writer and analyst. He tweets at @BukhariMubasher