Paradigm shift, the sooner the better

February 18,2019

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Political leadership generally makes tall claims, bordering on hyperbole, to attract popular support for use as cat paw to scale the dream of political heights. But such promises may not be sky high nudging the leadership later to get embarrassed in full glare of the public and media. PTI Chief Imran Khan’s repeated and sworn declarations before the coming to power that he would prefer to go to political oblivion but never go to (IMF) carrying begging bowel seeking loans for bail out. Ground realities, as always, mauled the same myth withering on the vine. Ironically, his latest U-turn in this count perfectly exemplified from sublime to inconsequential in that context. His tactical retreat in the face of precarious economic situation was seemingly plausible because it was teetering on the brink of crisis wrought with dangers of appalling proportion. But his credibility suffered again that might be difficult to restore as the cascade of faux pas were continuing in perpetuity.

The negative ratings of the country’s economy by the international credible organisations reinforced the reality of the economy gasping to breathe needing immediate reprieve to save it from imminent collapse. Their findings explicitly implied the substantial downgrading of the GDP growth, revenue generations measures not bearing the desired results, lending from the State Bank has been unprecedented, rate of inflation making the people poorer, stock exchange state of affairs is miserable, investment both domestic and foreign are depressing, unbridled circular debt is not registering any sign of abating, exports and imports imbalance is refusing to narrow down, treasury and opposition benches are up in arms against each other with no inclination on the part of government to mend fences. Resultantly, the situation as has obtained in the country is a source of grim anxiety for the nation and it is likely to intensify because the mandarins are not prepared for the paradigm shift in the government and political affairs.

Prime minister’s recent meeting in Dubai with Christine Lagarde, MD International Monetary Fund (IMF), was presumably scheduled to sensitise her about the urgency, and the bare minimum level of financial support Pakistan required to meet the pressing payments obligations pertaining to debt servicing of international loans to evade the hanging sword of default. The immediate financial assistance from the friendly countries -- China, Saudi Arabia and the UAE — might have kept the economy just floating in the trouble waters to avert the vortex of economic lamentable consequences but not enough for the longer period of time. The timing was the essence and the country must arrange enough financial support from other sources as well enabling it to stem the tide of economic meltdown. Also, needed the loans to lay out the realistic road map to introduce short term and long term structural reforms to put the country on the trajectory of growth and development. Undoubtedly, Pakistan’s economy needs immediate shot in the arm that was only possible through the courtesy of (IMF) enabling the country to find the pathways out of economic labyrinth. So, Pakistan had to go to IMF as a last resort though belatedly with the tinge of swirling desperation. The official composure akin to run of the mill could not stand up the upfront economic contingencies those were looming larger with every passing day.

It may be kept in mind that (IMF) is a loans disbursing international agency not a charity organisation that strictly operates on the basic principle of cost-effectiveness with the zest of helping the countries to overcome the economic downward spiral notwithstanding the strategic interests of the contributors of the (IMF). It is mandated to lend financial support to the countries in economic straitjacket with utmost caution of viability. The principal amount so handed out has to be secured for which the (IMF) works out conditions with the potential recipient countries. The recipient countries may need not to go knees down to accept the conditions but they have to present their case threadbare to the satisfaction of the (IMF) Board of Directors. It seemed the talks of (IMF) with Pakistan delegations had attained finality after mutual agreement on terms and conditions.

Unfortunately, the conditions of (IMF) loans are normally unpopular among the people at home because of the clear diktat of tightening of the belt for the general public who are at the receiving end at the end of the day. The (IMF) conditions usually stipulate increased revenue generations measures through increased taxes, withdrawal of subsidies, and privatisation of the loss making state enterprises and may be slowing down of the economy by slashing the development expenditures necessitated to bridge the deficit etc. The fulfillment of the conditions triggers inflation (tax on poor), unemployment, expensive goods and services etc. These harsh and absolutely critical steps make the government politically vulnerable because its opponents may seize upon the opportunity to settle the scores with the ruling party. The real danger is of people taking to the streets against the government. The resultant uncertainty becomes problematic so far as the making of the turnaround of the economy is concerned. The mass unrest against the government directly hurt the reforms and structural programme of the economy at the altar of incumbent government’s political survival strategy.

The government has to walk a tight rope while grappling to maintain a delicate balance supporting the conditions of the (IMF) as the bitter pill, and at the same time ensuring not to cross the threshold of popular resilience. The credibility and popular support of the incumbent government may be the only available instruments those may help to navigate successfully out of the unchartered and troubled waters of politics mired in unpredictability. The added problem with this government is that its relations with media are going from bad to worse. The message of the government may not settle well among the people because the media is not happy with the government and its possible stuttering may not serve the purpose well. The walking of the talk and cooperation of media are vital to win the hearts and minds of the people in favour of government policies. Ironically, the media representative organisations are at loggerheads with the government ministers who have to face their wrath as they recently boycotted their press conferences.

The IMF must have put forward conditions before the Pakistani delegates required to be met for qualifying the financial support. Pakistan had no option but to accept the same more or less after seemingly successfully convincing a package of relatively on soft terms under the circumstances. The government earlier claimed that it did not want to give the impression of desperation to get the financial support from (IMF). The strategy sounded flawed because it failed to serve as leverage because the economic indicators were so obvious those left little room for the government delegates of the premeditated maneuvering. The delay only caused uncertainty impeding the domestic and foreign investors to take plunge in the country’s capital market. Timing plays important role in failure and success of any undertaking. Delay in engaging with (IMF) by Pakistan, reasons best known to them, only hurt the economy because the corresponding uncertainty took heavy toll in multiple ways.

The government’s tacit juggernaut for obtaining the (IMF) financial support without taking the Parliament on board testified its step-motherly treatment being meted out to the Parliament in general and to the Opposition in particular. The government strategy undoubtedly did not carry the compatibility with the best democratic practices. The Opposition demanded the government should have kept the Parliament in the loop that was quite justified because the people had the right to know who have to pay back the loans with interest. It was a sensible demand and the government should have taken the Parliament into confidence implying the whole nation had taken the ownership of the IMF loans. It might have accrued the requisite legitimacy so important to attract foreign investment in an atmosphere of transparency and unity across the political divide. One wonders as when they will understand the optics of a democratic dispensation.

It was going to be the 13th time Pakistan had gone to the IMF for bail out that spoke in volumes of the failures of the successive governments to manage the economy on sustainable basis. The major factor of the failure was the lack of political stability and continuity of the political system that was sapped by the anti-democratic forces through unwarranted interventions and political engineering further reinforced by the political rivals who were prepared to go to any extent for the sake of the fulfillment of power politics pursuits. Let us hope and pray that this may be the last time to knock the door of the (IMF) as asserted by the prime minister of Pakistan. However, the prognoses are not looking promising because of the fierce confrontation between the government and the Opposition. The government is well advised to reach out to the Opposition to seek their cooperation so critical for the successful functioning of the political system. The ruling party may understand the indispensability of the Opposition in the democratic system considering it as government in waiting. It is easy to form government without the cooperation of the Opposition but to run the government without Opposition is different ball game altogether. This unblemished truth may be understood by the ruling party without an iota of doubt and opt for paradigm shift, sooner the better.

muhammadshaheediyahoo.com


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