LAHORE: The International Monetary Fund (IMF) is considered as the lender of last resort and in many instances acts the same way as loan sharks in developing economies do by fully exploiting the loan seekers.
Pakistan went to the IMF because no other country was prepared to give us loans. In fact, the global grip of the IMF is so strong that all other global financial institutions and even friendly countries link even the rollover of past loans to the letter of comfort from the IMF.
Countries or people approach lenders of last resort when they are in deep distress, and need finances immediately. The loan sharks operating in the informal sector spell out their conditions before giving loans.
Similarly, the IMF also puts down all conditions on the table to give a country the financial assistance it desires. This is fair enough, but in the recent case of Pakistan, the IMF spelled its conditions before providing the part payment (tranche) of the loan it agreed to provide to Islamabad.
Pakistan fulfilled all those conditions as the IMF refused to soften its stance on any of its conditions. But as one set of conditions is fulfilled, the Bretton Woods Institution comes up with a new set of conditions.
This has been on repeat for the last nine months or at least the last six months since the IMF agreed to begin negotiations. It is extremely unfair.
The IMF has tied the hands of the Pakistani government on taking measures to control manipulators and speculators.
It is because of the IMF’s cat and mouse policy that the speculators are minting money from the capital market and money. Whenever there is an indication that the deal with the IMF is in its final stages, the stock market goes up and the rupee recovers some of its lost value.
But when the imminent deal is not signed, the stock market and the rupee value rapidly go down. The losers in the stock market are small investors and gainers are speculators and manipulators. In case of rupee, every time it goes down, the losers are Pakistani consumers and the government which sees its debt servicing increase exponentially. This hide and seek has been going on weekly or on fortnightly basis for the last six months.
IMF is a proponent of transparency, but why can it not spell out all its conditions publically and post on its website? It can update the public about the conditions that have not been fulfilled. Then it would not look good if it added further conditions periodically. The IMF must think passionately as well.
When the government of Pakistan jacked up power and gas rates on its demand and slapped taxes according to its demand it was always accompanied with high inflation and price hikes. If the deal after fulfillment of the IMF conditions is still delayed, it taxes rupee value.
We all know that our power and energy needs are fulfilled by imported fuels.
With increase in dollar value against rupee, the cost of power and gas increases that again has to be passed on to the consumers. Had the IMF deal been timely signed these increases would not be required as the rupee would have remained stable.
The IMF behaviour is a clear signal that might is right. The powers that matter and control the IMF remotely ask the government of Pakistan on the sidelines for political concessions that are not in our sovereign interest and they want to compromise our sovereign status.
