Living on loans

October 27, 2021

Pakistani officials who were on a long official trip to the US, which started in early October, for negotiating the revival of the $6 billion loan IMF package kept promising ‘good news’...

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Pakistani officials who were on a long official trip to the US, which started in early October, for negotiating the revival of the $6 billion loan IMF package kept promising ‘good news’ for Pakistan. In their press talks, they would confidently imply that the IMF could announce the next tranche for Pakistan as soon as the next day. On the other hand, IMF officials kept their silence all along.

Finally, Shaukat Tarin, the now adviser to the prime minister on finance, left the US for Saudi Arabia to join Prime Minister Imran Khan, while the deal with the IMF remained inconclusive. Pakistan Embassy officials didn’t comment on the issue, reportedly under instructions.

Thanks to Pakistan’s cricket team for its unique, historic and ‘conclusive’ victory against India that helped us all to ignore the precarious IMF situation. Now the weekend of October 23 has passed without any announcement about these negotiations.

This is how Pakistani leaders mislead the nation by covering up the truth. Talks with the IMF were inconclusive. So far, Pakistan has obtained 22 loan packages from the financial institution; never has it ever fulfilled its commitments with the IMF for similar concessions and endorsements. A Pakistani-American I recently met explained the situation quite well and added that Pakistan never made any serious effort to develop its economy and become self-sufficient and kept enjoying IMF loans and endorsements.

The IMF – a global organisation of 190 member countries – is objectively aimed at promotion of global monetary cooperation and expansion and balanced growth of international trade and providing resources to its member countries that are facing difficulties in their balance of payments. To promote its goals of stability of international monetary and financial systems, the IMF employs three main functions – surveillance, financial assistance and technical assistance.

It shows that member countries which benefit from the loans released and the financial arrangements created by the IMF must act to stabilise their economies and balance of payments as soon as possible; economic self-sufficiency must be achieved, and external debt obligations should be fulfilled in compliance with the ‘letter of intent’ signed by representatives of borrowing countries.

This brings us to a serious question: in the case of Pakistan, how many times have we benefitted from these loan programmes? Did we take measures to reform our economic and fiscal policies to achieve our goals of self-sufficiency and, eventually, freedom from the IMF? Did we follow the financial institution’s ‘technical advice’ to either correct or counter our fiscal and economic deficiencies?

Answers to these questions will reveal the facts how successive governments in Pakistan have been enjoying the IMF programme without much compliance of its terms. PML-N Leader Dr Musadik Malik has rightly remarked that IMF concessions are enjoyed mostly by the Pakistani elite, and when it comes to complying with the Fund’s technical advice and conditions, ordinary citizens are inflicted with high taxes, price hikes, expensive gas, and misery.

There is no doubt that the IMF’s decision-making process is now heavily politicised, and like the UN’s, its mechanism is also used to favour the rich and members with a large voting share. But it is also true that the offer and conditions of the IMF are clear. The country can take it or leave it.

Last weekend, tired by the apparent inconclusive negotiations with the IMF in Washington, Shaukat Tarin made a choice to travel and join PM Imran Khan and watch the ‘conclusive’ and historic T20 cricket match against India.

The writer is a journalist based in the US.

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