The International Monetary Fund (IMF) has appreciated Pakistan’s efforts to undertake macroeconomic reforms, enabling it to get the second tranche of $ 540 million in December. The appreciation, albeit with a caveat on the foreign exchange reserves having fallen to Rs 6 billion is a rare occasion in IMF-Pakistan relations that had hardly ever moved into the second phase due to Pakistan’s failure to meet the conditionalities. As soon as the PML-N government assumed office after the May 2013 elections, it went to the IMF to replenish the depleted treasury it had inherited to avert a balance of payments crisis. Though the situation is as bad, since the foreign reserves have again fallen dramatically, the economic team both in the IMF and at home is confident that this too shall pass. On the eve of Pakistan’s arrival at the IMF’s doors, Pakistan’s economic woes were wrapped around two immediate crises: energy and terrorism. Because of the former crisis, industries were closing down. Investors had already fled the country and the prospects of new investors had shrunk. Small businessmen had no financial respite since the banks were busy doling out money to the government to meet its needs in the absence of enough taxes. The Federal Board of Revenue had been unable to meet its target, for its inability to tighten rhe noose around the tax evaders or netting those who had never been taxed before. The mismanagement of the public sector enterprises had been sapping the treasury. All this resulted in annual growth of a mere 2.5 percent and a fiscal deficit of approximately nine percent of GDP. According to the IMF, Pakistan has seen improved growth and has inched beyond the target of 2.5 percent to 2.75 percent. The fiscal deficit has also been reduced to 1.1 percent against the target of 1.7 percent over three months. For the energy crisis, the good news passed on to the IMF is the addition of 1700 megawatts to the national grid and the paying off of Rs 480 billion in circular debt. The government’s programme to privatize the state-owned enterprises has also earned applause from the IMF team, along with the tax reforms and its ability to meet if not exceed the targets. All in all the review conducted by the IMF has relieved the country of what is being called the ‘sky is falling mentality’. For a country passing through difficult times, such good news is welcome. However, there are questions that one wants to ask the government, especially about the circular debt which, according to the latest figures released by the government, has again piled up to Rs 160 billion. What exactly the government has planned to do about this recurring phenomenon of circular debt is not yet evident. Even having paid this huge sum, the power outages have reduced marginally, and as far as the addition of 1700 MWs is concerned, is it really an addition or does it merely reflect the reduced gap between demand and supply owing to winter setting in? The government’s future plan regarding changing the energy mix from fuel oil to more hydro and coal is indeed timely, but in view of Pakistan’s sluggish policy implementation pace, one is hard put to believe the government’s claim that the energy crises will be sharply reduced in 4-5 years. The economic woes afflicting Pakistan are myriad, but going by the picture given to the IMF, if so much could be achieved in less than three months, we have reasons to be hopeful. However, unless the benefits of the economic gains are passed on to the ordinary person, it would hardly be satisfactory. Inflation is still in double digits, things of everyday consumption are exorbitantly expensive, pushing more people down below the poverty line. The government should put more energy into bringing inflation down, so that it posts the real figures, instead of cosmetic ones, by the next IMF review meeting for the third tranche. *