The IMF does not have a magic formula to set Pakistan’s or for that matter any other country’s economy on the path to sustainable growth. It only serves as the lender of last resort for countries facing foreign debt default.

And the Fund conditionalities that come with the loan aim at quick-fix enhancement of the recipient’s capacity to repay the amount on the due date. But paradoxically these very conditionalities in the longer run erode the recipient’s ability to break what is called the beggar’s bowl.

The Fund’s very existence depends on the borrowers’ repeat requests for emergency loans. That is why during the decade leading to the 2007-08 collapse of the banking sector when even the African countries were showing annual average growth rate of six per cent, one would occasionally hear the talk that the time had come to replace the IMF with an institution more geared to ‘the unending boom’ era.

Consequently, at the last World Economic Forum at Davos early this year a desperate Fund manager was heard uttering blasphemy—it was prescribing deficit financing to rich countries to combat the economic chaos they were undergoing because of the unusually steep rise in prices of oil, food and other essential commodities.

Now that the so-called boom has burst and a number of countries facing massive debt defaults with Iceland, Ukraine and Pakistan asking for emergency loans, the Fund is back in business with its one-size –fit-all formula---drastic curtailment of deficit financing, high interest and tax rates, withdrawal of subsidies, huge reductions in development and non-development budgets even if it meant causing widespread unemployment and steep rise in inflation leading to a debilitating economic standstill.

This formula has never worked in any country. Though we never had to suffer IMF induced food riots, still it was mainly because the Fund had brought the national economy to almost standstill with its prescriptions in the 1990s that the former State Bank Governor Ishrat Hussain could later describe the decade as the ‘lost decade’ while justifying Musharraf government’s requests to the Fund, first for a nine-month Standby and then for a three-year PRGF.

If 9/11 had not happened and the billions associated with it had not flowed in by mid-2002, the Fund prescriptions that came with SBA of 2000 and PRGF of 2002 would have sent Pakistan on the same route that it had just sent Argentina—tearing downhill.

His claim in 2005 that Pakistan had broken the begging bowl notwithstanding, the designer bubble of services that was crafted in such a cavalier way by Shaukat Aziz with the 9/11 dole met the fate that it was destined to by the time he went back ‘home’.

There are host of reasons why the IMF formula does not work the way the recipients wish it to work. In the case of Pakistan particularly, however, it has failed again and again because the formula is not designed for an economy which has been suffering from war mania from the day the country came into being.

In the last 61 years, Pakistan has fought two full fledged and two half wars with India, one almost a decade-long proxy war against the defunct Soviet Union on behalf of the so-called Free World, two 10-year long low intensity wars in the 1990s, one in Afghanistan on the side of Taliban against the Northern Alliance and one in the Indian Kashmir on the side of the so-called Mujahedeen and is now engaged in an unfinished war for the last seven years against what is called international terrorism on behalf of the US and Europe. In between this country has remained in a state of war, fully mobilised to take on real and imaginary enemies all set with the first- use option.

Pakistan’s ruling elite been using most of the money that the country has been earning and the resources it has been borrowing on the excuse that it was about to go bankrupt plus the dole that is donated by bilateral and multilateral donors for building socio-economic infrastructure for buying the state of the art weapon systems to equip what is called the fifth largest army in the world.

So, all in all ours has been a war economy. And we have been financing this economy mostly with other peoples’ money. The IMF formula has no solution for correcting this kind of economy.

Secondly, the formula also does not do much to help boast the lynchpin of our economy—the agriculture sector. In fact by the time the Fund formula starts taking effect, this comparative advantage of our economy has been seen to have regressed so much so that during both the decades—1990s and 2000s ( so far) this backbone of our economy has grown at the abysmally low levels of 2-3 per cent on an annual average.

In the 1950s-70s period, the Bretton Woods Institutions used to talk a lot about land reforms but did nothing to implement this reform in Pakistan. Now they don’t even talk about it.

Similarly every time we have gone to the IMF for emergency loan there have been a lot of rumours that under the loan conditionalities the country would be obliged to bring incomes from agriculture and stock trade under the income tax net. But after signing of each agreement with the Fund, Pakistani negotiators have been heard to announce proudly that they have successfully protected the country’s ‘economic sovereignty’ by refusing to accept this particular conditionalitiy. It has happened this time again.

One more thing, by strictly imposing on the recipients the conditionality that demands that subsidies, even that which serve to boast agriculture produce but failing to make the rich countries withdraw their farm subsidies the Fund has been turning these recipient countries including Pakistan for ever dependent on the developed world for food.

So, unless Pakistan gives up willingly its war oriented economy and diverts most of the resources it earns and receives by way of loans and doles from outside to the agriculture sector while making all those who earn taxable income no matter from which sources to pay their dues to the treasury honestly and in full, Pakistan would forever remain an important borrower of the IMF.