BLAMING others for all the ills is nothing more than excusing yourself. That is what ruling elites do in Pakistan — blame the International Monetary Fund (IMF) for the economic instability. Undoubtedly, the IMF’s agenda-driven conditionalities put the economy of a country in tight spot, but government failure to deliver can never be ignored and excused.
Pakistan has been seeking financial help from the IMF since 1958. Excluding the recent paused IMF programme for whose resumption talks are underway, Pakistan has availed the IMF loan facility 22 times.
In every government, ruling elites given their incompetence and inefficiency, which result in financial apocalypse, repeat the same mantra; ‘we are on the brink of economic meltdown and only the IMF can save us now’ and they agree to swallow the bitter IMF pill.
The IMF was formed in Bretton Woods Conference in 1944. The Fund was to perform the role of monetary cooperation, stability of currency exchange rates and lending upon the balance of payment crisis. But it has switched its role and started influencing the countries it lends money.
Has the loan granted by the IMF delivered on its mandate of financial stability? Certainly not. Consider Argentina, which in 2018, took the largest ever loan of the IMF’s history; around $57.1 billion, but what happened afterwards is not surprising; inflation rose, employment fell and capital fled the country at record rates. Pakistan’s situation is also not different than this.
Moreover, what is objectionable is the IMF’s tough, rather ill-intentioned, conditionalities, including austerity, cutoff in Public Sector Development Programme (PSDP) budget, removal of subsidies and increase in taxes. Irony is that the country, which reaches out to the IMF to provide such economic benefits to its masses, fails and is compelled to do the opposite.
In addition, calling the IMF conditiona- lities agenda-driven is not wrong. As the United States holds the lion’s share in the IMF (16.7 per cent), it uses the lending agency for its own vested interests and benefits.
In this regard, a report to the Senate Foreign Relations Committee 111th Congress, March 10, 2010, states that the international financial institutions (that includes IMF) have traditionally been an important element of the US foreign policy which provides it with an oppor- tunity to maintain its influence over other countries.
But, blaming IMF alone is not wise, as neither anyone forces any country to rush to the IMF, nor has Pakistan ever been forced to do so. If only the IMF is responsible for Pakistan’s worsening economic crisis, what has the country done in 42 years it spent without the IMF?
What is required is the making of structural reforms and strict implemen-tation of them, which is only possible in good governance. In this connection, Pakistan can learn from its neighbour, India, which after its last encounter with the IMF, got its acts together and never returned to it.
Resultantly, it became the economic powerhouse and has now the share-holdings of 2.4pc in the IMF.
It is high time ruling elite got its act together and worked for the economic improvement of the country so that the country may never return to the IMF and achieve economic stability. Otherwise, blaming the IMF alone is just tantamount to putting the weight off the shoulders. This will help no one.
Ali Muhammad Khan
Sukkur
Published in Dawn, February 28th, 2023
