Dr Ishrat Hussain, the Governor of the State Bank of Pakistan, is reported in Dawn of May 28 to have said at a seminar in Islamabad a day earlier that the critics of the IFIs’ (international financial institutions) conditionalities are ‘leftists’.

All those, including myself,who have remained critics of the IFIs’ policies and conditionalities for over two decades would feel flattered to be called ‘leftists’, a term, by governor’s definition, which would now include many thousands of Pakistanis and millions of people world-wide who are against the disastrous anti-people policies of these very IFIs.

If the anti-globalisation, anti-capital rallies held from as far afield as Seattle and Milan, to Bangkok and Melbourne, are any indication,the leftists are fairly popular.

One can understand why employees of the IFIs defend their institutions, for they need to keep their jobs; but ministers and central bank officials of independent and sovereign nations, no longer in the pay of the IFIs, ought to be a little more circumspect. One would have thought that while they were devising policies at the World Bank or the IMF to be implemented in some poor African or Asian country, they would have seen the results and consequences of their remedies first hand. With their hands soiled, one would have thought that when they returned home to offer their unique services to their home countries, they would have learnt their lessons well and would have tried to distance themselves from many a sordid past.

The Economics Nobel Prize winner, Joseph Stiglitz, author of Globalisation and Its Discontents, who worked at the World Bank as its Chief Economist and returned to academia, is a rare exception, a man with integrity and honesty, is a ‘leftist’ by Ishrat Hussain’s definition, for he too has written this extraordinary book critiquing conditionality.

But what is it about the conditionality of the IFIs which makes us leftists see red? The IMF and the World Bank, the principal international financial institutions, give loans to countries so that these countries can put this money to use and move from a low economic and social development status and improve the condition and welfare of their people. Conditionality is the set of preconditions which these institutions enforce upon these countries prior to the IFIs advancing the loans. The conditionality enforced on countries as diverse as Rwanda and the Philippines are broadly similar, regardless of particular specificity and local conditions. In fact, this has been one of the main criticisms of IFI conditionality, the assumption that one size fits all. These conditionalities are usually too uniform in nature and are implemented universally and globally, across countries. Without taking due cognisance of particular histories, institutions, structures, these programmes and their conditionalities lack any semblance of contextuality.

Almost always the fiscal deficit is considered to be the mother of all evils, and the most significant and real cause of the distortions and problems that exist in the economy. Whether it is high inflation, low growth, a high current account deficit, lower private sector investment, crowding out, all are attributed to a high, ‘unsustainable’ fiscal deficit.

Hence, a cut in the fiscal deficit is probably the most important conditionality imposed, regardless of the nature and quality of government spending. Countries are expected to impose a consumption-oriented general sales or value added tax, to cut government expenditure in order to reduce the fiscal deficit, to privatise, to remove subsidies which, in most underdeveloped countries, are on food items, and essential inputs like fertilisers and utilities.

IFI conditionalities include the removal of non-tariff barriers, replacing them with tariffs, tariffs which are supposed to be lowered substantially across time, so that cross-border ‘distortions’ are removed by getting ‘prices right’ and local industry can compete effectively with foreign goods - the so- called level playing field.

The core logic of imposing these conditionalities is to make countries more market friendly largely for foreign capital, to promote private sector initiatives and interests, and to open up the economy to foreign goods and competition from abroad as the process of globalisation proceeds. The conditionalities and the programmes that they precede are pro-globalisation, pro-capital, but as country after country has shown, the consequences of enforcing these conditionalities have had anti-people, anti- welfare and deleterious effects.

While numerous examples can be found world-wide, the case of Pakistan since the late 1980s when these conditionalities were imposed, shows how it has suffered on account of these conditionalities and the subsequent loans.

Except for those who have worked for the IFIs or are government spokesmen, not a single Pakistani economist has stated that these IFIs and especially their conditionalities, have in any way helped the country. All have written about growing poverty, increasing income and social inequality, large scale unemployment, industrial meltdown, growing debt, and the deterioration of social services due to cuts in development expenditure, all resulting in the worsening of the social and human condition which has also resulted in our fall on UNDP’s Human Development Index.

It has only been these ‘leftists’ who have made their voices heard, although often to no avail, since our ministries and central banks are run by those who enthusiastically support conditionalities by their former employers. Yet, more and more people globally are becoming leftists — many of whom have suffered the consequences of these conditionalities first-hand — as there is a growing anti-globalisation world social movement, which talks about social welfare, asset redistribution, peace, and social and human justice and rights, all leading towards the true meaning of development and progress. It is times like these, when I count my blessings and say: Thank God I am a leftist!