Pakistan is in a fix.{Hey, tell us something new} A substantial part of its budget for 2009-10 was to be financed from foreign sources, including the commitments made by the Friends of Pakistan (FoDP) in Tokyo on April 17, 2009 amounting to $5.513 billion. Japan and the US had announced pledges of one billion dollars each, while offers from other countries such as Australia, France, Germany, Iran, Italy, Kuwait, Netherlands, Korea, Saudi Arabia, Spain, Sweden, Turkey and UAE also appeared to be sizeable.
The disbursements, as is usual in such cases, were expected in stages but a major chunk was supposed to be received fairly quickly to enable the country to tide over its budget and the balance of payments crises. Most of the analysts now think that the whole exercise of requesting assistance from the FoDP was like a wild-goose chase and the authorities have no ground, at least for the time being, to prove them wrong.
An official of the Economic Affairs Division (EAD), familiar with the situation has told a newspaper that
"not a single dollar has been disbursed to Pakistan as the pledges have not transformed into commitment". Asked to comment on the issue,
Finance Minister Shaukat Tarin remarked that Pakistan will get 500-600 million dollars by the end of the second quarter of the current fiscal.{The second quarter ended a while ago}
Incidentally, he was also hopeful of getting the required amount during the first quarter, but Islamabad was forced to ask the IMF to bridge the $400 million gap in the absence of a response from "the friends". Obviously, Tarin would like to boost the morale of the nation by appearing to be optimistic, but
the sad fact is that the FoDP meeting at Tokyo, looking from hindsight, was probably not worth the effort. 
In fact, it may even be termed delusory because it gave birth to false hopes and encouraged the authorities to become complacent at the time of the budget when a lot of domestic efforts and a major policy shift were needed to stabilise macroeconomic indicators of the economy.
Misreading of the situation has also resulted in certain other undesirable consequences. The fiscal deficit target agreed with the IMF for the first half of FY10 has been missed by 0.2 percentage point of the GDP and the government has to request for a waiver for not meeting the performance criteria. The size of the budget deficit would have been much higher if the development expenditure had not been slashed.
Sticking to the IMF programme would, at least, keep the country solvent for the time being but the loans from the Fund would increase the debt stock that has to be repaid with interest overtime. Looking closely, it is no secret that Pakistani authorities are depending heavily on the largesse of foreign donors. For a sovereign country, this is an embarrassing, or even a humiliating situation. {Hey, more embarrassing when the said country is a Nuclear Weapon State possessing the 'Islamic Bomb'}
More plainly, the largesse may be forthcoming only as long as we continue to pander to the whims of foreign countries or multilateral institutions, willing to have a favourable look at our economy for reasons of their own.
This is not how independent countries are managed and find their place in the comity of nations.{C'mon. You should ask the question why did such a situation come to pass ?}
The consequences at the domestic level are more than obvious. Social sectors have been starved of resources and development expenditures curtailed to the minimum to keep the budget deficit at a reasonable level in order to ensure financial stability. This has not only increased unemployment and poverty, but has severely undermined the development potential of the economy.
Increasing militancy and lawlessness in the country are some of the manifestations of a patently wrong approach to economic management. The potential to increase exports has not been realized due to problems in the energy sector, which is crying for more investment.
Even the issue of circular debt has not been resolved so far due to a serious lack of finances and inept policies.
To get out of this messy situation, Pakistan needs to take bold steps, especially in the fiscal area, to reduce dependence on foreign resources.
{How can that be achieved ? It is so easy to say that, but you guys have always lived out your lives on alms. You are so used to that} Unfortunately, however, the country has not been able to make reasonable progress on this front.
For instance, tax collections by the FBR at Rs 1157 billion, during 2008-09, were 92.6 percent of the original target and only higher by 14.8 percent than last year, resulting in a drop in the tax-to-GDP ratio. During the first quarter of 2009-10, tax collections were only marginally higher than in the same period last year.
In the face of mounting expenditures due to a variety of reasons, including a warlike situation, this is an untenable position and
the IMF would be prepared to grant waivers only till the time the international community is on our side. The day we are not viewed favourably by foreign countries, especially the US, the IMF may change its colours and refuse to oblige. In a nutshell, the country is almost living on a dole {you realized that only after 62 years ?} and needs to break free from the old economic strategy that has brought Pakistan to this unsustainable and mortifying position.
To start with, the twin deficits of the economy have to be reduced to manageable levels without losing more time by resorting to all kinds of measures, which are bound to be harsh for almost all sections of society. The policy thrust for such a strategy is well known, but
whether the leadership of the country has the stomach or even the inclination to go the whole hog to adopt this respectable route is a moot question. As an independent nation, we must take responsibility to manage our own house.{You decided to be a rentier state a long time back. You are too far down that road to turn back now. Good bye Pakistan} 