IMF’s diktats to harm Pakistan

Four days before his resignation, Finance Minister Assad Umar had held meeting with leading representatives from various chambers of commerce and industry, and later told journalists that “the bailout package with the IMF had been agreed upon in writing and we have an agreement on all policy matters that included exchange rate, fiscal deficit, energy, public finance and public sector entities”. Earlier, in July 2018 US Secretary of State Mike Pompeo had said there was no rationale for the IMF to bail out Pakistan if Islamabad uses the IMF money to pay off Chinese loans. This is an effort to roll back CPEC which could adversely affect our economy. Pakistan should neither compromise on security nor on making people’s lives difficult by increasing gas and utility tariffs that were already increased by the former finance minister and decline in value of rupee against dollar.
IMF and World Bank are tools in hands of foreign powers who want Pakistan to either slow down work on the CPEC or come out of it, eminent economist and Dean of Special Sciences and Humanities in the NUST Dr. Ashfaque Hasan Khan told English daily the other day. He said Pakistan simply could not get out of CPEC, which is of paramount importance and good for its economy and people. “From the very beginning, I have been suggesting the PTI government to avoid going to the IMF this time, as the geo-strategic environment has altogether changed. In the past, Pakistan always stood on the right side of these powers, whereas today Pakistan is standing on the ‘wrong side’ of these forces. The Indo-Pacific alliance also stands together to counter the growing influence of China in the world”.
Three US congressmen had also recently suggested that the IMF should not be allowed to lend money to Pakistan fearing that it would use this money to pay back the Chinese debt. International Finance Institutions are also trying to create confusion, as GDP growth numbers worked out by the ADB at 3.9 percent, by the World Bank 3.4 percent and the IMF 2.7 percent meant to pressurize Pakistan into accepting strict terms. IMF predicts lowest GDP growth but at the same time it is asking 40 per cent increase in revenue, which is not understandable. The power of the IMF becomes clear when a country gets into financial trouble and needs funds to make payments on private loans. Before the IMF grants a loan, it imposes conditions on that country, requiring it to make structural changes in its economy. But all those measures proved infructuous.
It is important to realize that the IMF and World Bank are tools for powerful entities in society and big powers. In fact, the IMF is driven by many factors, including the dictates of its larger shareholders – big powers – to promote their own security and economic goals, and its own financial interests. Instead of being helpful in restoring long run viability of the economy, the IMF has been responsible for worsening the situation. Reportedly, the US and the West had been persuading the IMF to stop providing loans to Pakistan or come out with stringent conditionalities to force Pakistan to stop working on nuclear and missile programs. Efforts have been made from time to time in the past but despite all incentives and measures such as price mechanism adjustments, subsidies, rebates, exchange rate adjustments and devaluation, Pakistan has not been able to boost its exports.
Even massive devaluation during the 1990s and thereafter could not produce positive results because Pakistan could not build an export base through diversification; hence the exports were not enough to meet the growing needs of foreign exchange for the import of goods and services. Furthermore, the SBP report revealed that despite robust economic growth and macroeconomic stability, Pakistan could not overcome the problems of poverty reduction, inflation and an increase in investment level to achieve sustained economic growth and create more employment opportunities. The glaring reasons were profligacy, ineptness and corruption of the ruling elite. The new government is determined to eliminate corruption, reduce poverty and put the country on the road to progress and prosperity. It is hoped that the government would negotiate with the IMF keeping in view that no burden is placed on the in vulnerable sections of the society.