Our newly-appointed Finance Minister Miftah Ismail is currently in Washington D.C. pleading with the International Monetary Fund (IMF) to revive the $6 billion economic assistance package for Pakistan. The global financial institution has called for tough economic decisions before the bailout package that was suspended during the previous government’s tenure is reinstated.
Before leaving for the crucial meeting, the finance minister warned the IMF wanted Pakistan to take a number of steps to do away with the subsidies, including raising fuel prices and power tariff. The Fund has set a series of conditions involving fiscal adjustment close to Rs1.3 trillion. It wants to discontinue tax amnesty scheme for industries, reduce circular debt, raise power rates and ensure fiscal savings.
The new prime minister is heading a coalition government and has vowed to pass the minimum possible burden to the people.
However, it is only a matter of time before the government caves in to the mighty IMF and accedes to all their demands. The vibes coming from the finance minister’s meetings with IMF already suggests that the government has agreed with the global lender’s demands to bring structural reforms for the crisis-wrecked economy at the expense of the masses.
In 2019, the IMF approved a $6 billion loan for Pakistan, the 22nd time we have gone to the global financial institution. Due to the unpredictable nature of our economy, strong dependence on imports, and gross misgovernance, we have to seek loans and bailouts. In the 1990s, we were notoriously referred to as ‘international beggars’ as we sought pushed the begging bowl to boost our economy.
The IMF was formally established in 1945 in the aftermath of the new global order after World War II with the goal of restructuring the international monetary system. It stated aim is “working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.” However, the result shows how the IMF has been used to bring down entire nations.
In 2002, a study showed that there was no consensus on the long-term effects of IMF programmes on economic growth. They increase the risk of a banking and political crisis , reduce economic growth and are less effective in less-developed countries dependent on foreign aid. Some research has found that IMF loans lead to economic moral hazard, reduce public investment, incentives and investor confidence. Yet it is still our misfortune that we have to repeatedly go to the IMF to bail us out.
Today, the IMF does not advise countries on possible public policy adjustments but forces them to do whatever they want. It has been a tool of developed countries to dominate over less-developed ones and even bring them down. Most IMF policies are anti-developmental and lead to loss of output and unemployment in countries were incomes are already low. It is a pity that we still have seek help from the global lender which is the symbol of imperial dominance and the country suffers.