ANOTHER world is possible. More and more countries are shaking off influence, the IMF and the World Bank had on their macro economic policies with improved outcomes. The dominant economic policy under the doctrine labelled as “Washington Consensus” is no longer considered viable.

The macro-economic policies framed under the Consensus, pursued by the IFIs have provided enough evidence that the successful development is possible only through home-grown wide-ranging economic policies.

While the Consensus policies provided for structural adjustment, macro economic policies ran counter to each other.

In recent years, this has attracted debate on ‘to re-think development’ or post-Washington Consensus as it has been realized by its architects that the original doctrine has shortcomings.

This ‘new way of thinking’ has attracted much arguments of economists on two preferences already. One is for the emergent of the ‘post Washington Consensus’ based on the lesson learned, out of experience.

The other wide ranging suggestions stress that ‘say farewell to the old doctrine as it was based on the myth that there is no other alternative, it is now failed and there is a need for some alternate policy for development.

A strong doubt is also prevails that, this new effort of the IFIs will also prove not something ‘new’ but will remain extension of the core contents of the original Washington Consensus.

The World Bank acknowledges that there is a need of refining its policy based on experience of last two decades. The Bank has also backed away from pure free market dogmatism by acknowledging the role of the state in the donor-relation as well as in policies.

Joseph Stiglitz, a former World Bank economic Adviser maintained a critical view that Consensus’s rules are applied uniformly to all countries without out taking into account any specific aspect of local conditions.

The fact remains that Washington Consensus has supported the macro-economic policies under the development myth for an anti-inflationary policy, opening border of all capital flows, deregulation etc. The inherent weaknesses of the policy, with snags in poverty eradication made the Washington Consensus highly questionable and a fatal device in recent years.

Actually the traditional approach had left very little room for the debate on the economic, social and political issues of the recipient country once ‘one fit for all’ strategy was adopted.

In the light of World Bank’s different studies for evaluation of their programmes now, it has conceded that there is no universal blueprint for implementation and success of the structural adjustment programme in all developing countries. Every country’s own conditions are important for the specific outcomes.

The initiative for breaking this old dogma of this doctrine was taken by the German federal government in 1999, on the basis that there are imperfections in the policies of the Consensus. That the IMF and the WB did not succeed in fostering development or equitable distribution of growth.

The most critical issue of the economic policy today is inequitable distribution of wealth. If we analyze the income gaps in the context of Pakistan, as in the following table, we will find that there is sharp increase in poverty and decline in the GDP particularly during the period of structural adjustments.

It shows disappointing results in terms of income distribution, an outcome of faulty macro-economic policies which also led to the mounting foreign debt/debt servicing. The question as how to enhance the trickledown effect remains unexplored.

Another major flaw is that the policy focused on stabilization and ignored macro-economic policy for investment and growth.

Last two decades were marked by ‘aid fatigue. The net disbursement of aid through official development assistance to developing countries declined after 1992 on rising fears that foreign aid is generating more aid dependency and high debt servicing, and it would have negative impact on the recipient country. And lenders were stuck with bad debts because of policies pursued by them.

There is much substance in the outcomes of the structural adjustment policy for Bretton Woods institutions to learn.There are snags in the poverty alleviation. The developing countries should be given effective ‘say’ in the IFIs policies.

Another flaw is gap between the short-term budget planning and long-term development planning. This gap needs to be bridged. Here we need to shake the IFIs influence in national decision making.

Dr François Bourguignon, chief economist of the World Bank says that the bank no longer adheres to a strict set of principles, and has learned lessons though experience.

However, the bank still promotes its role in the macro-economic stability, though, trying to have a pragmatic approach. Nevertheless the bank’s focus remains on economic restructure for market economy to repay the debt. The bank is supporting the institution-building and good governance and the bank professes to believe in ownership and partnership.

We are in the year 2006. We must take a fresh look at the prevailing model and search for a viable new framework for development.