Thursday May 23, 2024

After the IMF

By Dr Farrukh Saleem
January 29, 2023

After the IMF, electricity will be pricier by 20 per cent. After the IMF, gas will be pricier by 50 per cent. After the IMF, petrol and diesel will be pricier by 15 per cent. Consequently, the rate of inflation would hit a high of 35 per cent, the highest in Pakistan’s 75-year financial history. However, this unprecedented jump in the rate of inflation will be a one-time blip as the international price of crude oil has come down from a high of $123 per barrel to $80 per barrel. Additionally, the price of palm oil has dropped from Malaysian Ringgit 7,000 per ton to Malaysian Ringgit 4,000 per ton and the price of coal is down by 15 per cent.

No need to panic. After the IMF, there will be serious attempts to assign blame for the negative effects to others. After the IMF, the medium to long-term outlook will stabilize. After the IMF, the government must move towards genuine structural reforms.

Haemorrhaging is the loss of blood from the circulatory system. When there is haemorrhaging , the body’s normal blood flow is disrupted and the amount of oxygen and nutrients that reach the cells and organs decreases. Haemorrhaging leads to organ failure and death if not treated on an urgent basis.

Pakistan’s economy is haemorrhaging. Over the past two decades, the power sector has haemorrhaged to the tune of Rs2,500 billion. The gas sector has haemorrhaged to the tune of Rs1,500 billion. The government’s so-called ‘commodity operations’ have haemorrhaged to the tune of Rs800 billion. Pakistan International Airlines (PIA) is haemorrhaging a hefty Rs67 billion a year, every year. Pakistan Steel is hemorrhaging Rs67 billion every six months. The ‘textile cartel’ has taken away a hefty Rs1,000 billion in subsidies over the past couple of years. The ‘fertilizer cartel’ takes away Rs150 billion a year, every year. Imagine, the accumulated Public Sector Enterprises (PSEs) debt now stands at Rs2 trillion.

Our economy is where it is because of this haemorrhaging. Is there anyone anywhere to stop this haemorrhaging? Remember, haemorrhaging leads to organ failure. Can anyone name an organ of the state that is still functioning?

The IMF is our new dictator. Remember, dictators are individuals or groups who hold complete control over a country. The IMF dictates because of the haemorrhaging. To be certain, the IMF shall continue to hold complete control for as long as the haemorrhaging continues. Countries ruled by dictators have three common characteristics: lack of development, economic instability and political repression.

Haemorrhaging requires blood transfusion. Over the 1948-2016 period, a total of $78.3 billion came in as ‘blood transfusion’ from the United States. A hefty $60 billion came in as ‘blood transfusion’ from multilaterals. Some $27 billion came from China plus $10 billion commercial debt and $10 billion in international bonds. Over the 1950-2022 period, we have had 23 ‘arrangements’ with the IMF where the outstanding loans now stand at $7.8 billion.

Now there’s no blood available for blood transfusion. Haemorrhaging now requires urgent surgery to remove the source of the bleeding. Luckily, we know the exact sources of the bleeding. Where are the surgeons?

The writer is a columnist based in Islamabad. He tweets @saleemfarrukh and can be reached at: