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‘Ignoring reality: IMF satisfaction’

November 26, 2013

THIS is with reference to your editorial ‘Ignoring reality: IMF satisfaction’ (Nov 12), in which the issues ignored by the latest IMF evaluation have been brought up. I would like to add a few points.

First, the IMF needs to appreciate its part of the responsibility in the programmes’ success. In seven out of 20 IMF programmes in Pakistan, could the committed amount be drawn.

A majority of the programmes were suspended before completion. Needless to say, the absence of the will of ruling political parties resulted in the poor success rate. But an equally compelling explanation is the IMF’s irresponsible lending in the first place, followed by its inability to make the government accountable at earlier stages of the programme. In the 1994-97 period six IMF programmes were entered in. All failed.

Coming to the current IMF programme. Right from the start, the emphasis of the Fund should be on ameliorating the balance-of-payments position, the founding rationale behind the International Monetary Fund.

Given this, it seems too cheery for the Fund to issue a ‘satisfaction’ note with reserves crippling, rupee falling and no foreign investment coming in. One may surmise that the medium-term outlook of the Pakistani economy must be encouraging, but it is not.

The other side of the coin should concern the IMF itself. Why, despite its engagement with the Pakistani government, international investors remain indifferent to its signalling of the ‘right’ policies being pursued in the country?

Lastly, it cannot be overemphasised that the government is being a little too optimistic in expecting mere fiscal consolidation to get the wheel of the economy rolling. Appease the Taliban or launch a full-fledged assault, it does not matter to investors. What does is a clear vision and an articulated strategy to create a supportive, safe, and thriving business environment, where property rights and contracts would be enforced.

If the IMF remains overly focused at fiscal consolidation and the government keeps putting off critical decisions in the political arena, all we get at the end of the IMF programme will be debt.


Keeping us enslaved

WE are citizens of Pakistan. Our economy mostly depends upon loans from the World Bank and International Monetary Fund.

Our Rupee is around Rs107 to a dollar; double that of our neighbour India which too is a country like us with the majority of the population living under the poverty line or as middle class.

But, unfortunately, a 100pc literacy rate for Pakistan, the only hope to bring back prosperity, is too far to achieve.

Imparting education does not seem to enable the young generation to dream of a better future but it seems a means to minting money.

An expo called ‘Shaping futures’ was held recently, inviting students for registration. The average tuition fees for academic year 2014-15 was Rs700,000. Who can afford this exorbitant amount? Our children returned home disappointed, with tears in their eyes.

In fact, it is not the World Bank and IMF only which keep our country mortgaged for all times to come but also world-reputed financial institutions. What could be sadder!