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April 15, 2019

World powers blackmailing Pakistan on IMF bailout


April 15, 2019

ISLAMABAD: Foreign powers want Pakistan to either slow down work on the CPEC or come out of it, eminent economist and Dean of Special Sciences and Humanities in the NUST Dr Ashfaque Hasan Khan told The News.

Dr Ashfaque said Pakistan simply could not get out of this project of paramount importance, as it was good for its economy and people.

‘’From the very beginning, I have been suggesting the PTI government to avoid going to the IMF this time, as the geo-strategic environment has altogether changed. In the past, Pakistan always stood on the right side of these powers,” said Khan who is also the Economic Advisory Council member.

He argued that these powers had the clout of all major economies to dictate the IMF in Pakistan’s case.

“Today Pakistan is standing on the ‘wrong side’ of these forces. The Indo-Pacific alliance also stands together to counter the growing influence of China in the world. Three US congressmen have recently requested that the IMF should not be allowed to lend money to Pakistan fearing that it will use this money to pay back the Chinese debt.

Dr Ashfaque said India also built up armed forces on its borders due to which Pakistan also took same measures.

He said the Indian economy allowed maintaining military build-up for a longer period, but Pakistan’s economy, which was in tatters, could not allow it.

Dr Ashfaque said the government will slice down the development budget and maintain or increase the defence budget, but political parties and the social media will begin criticising allocation of major chunk of budget for defence.

This, he said, will create a gulf between the masses and the armed forces and that’s what the IFIs (international financial institutions) under the influence of big economies this time want under a well-planned design.

Coming to Pakistan’s economy, Dr Khan said GDP growth numbers worked out by the IFIs such as 3.9 percent by the ADB, 3.4 percent by the World Bank and 2.7 percent by the IMF served nothing but to push Pakistan to the Fund on strict terms.

The well-coordinated growth numbers of our economy seem a planned design to create unrest among the business community across the country.

He said the IMF worked out 2.7 percent GDP growth for the current fiscal and 2.5 percent for the next. Dr Khan said Pakistan was most likely to come up with close to 4 percent. ’However, the Fund is also stressing the government to make the revenue target of Rs5400 billion for the next budgetary year.

He argued that the IMF had factually made fun of it. On the one side, the Fund is predicting the lowest GDP growth, on the other side it is asking for 40 percent growth in revenue.

“When there is growth of 2.5 percent then pressurising to make revenue target on the highest sides is beyond wisdom of all economists,” he said.

Dr Khan said if Pakistan succumbed to the IMF pressure on the revenue target of Rs5400 billion, then the PTI government will be left with no option but to announce a mini-budget every quarter for more taxation to achieve the revenue target making Pakistanis’ lives more miserable.

Dr Khan feared that after the IFIs projected growth figures, rating agencies such as Standards & Poors and Moody’s will downgrade Pakistan’s ratings, making it unable to generate financings from the international market.

He claimed that the IMF had no capacity to even work out the growth of economy for next two months.

Mr Khan said the IMF will make Pakistan’s budget with growth in revenue target of Rs5400, cut on development budget and massive surge on taxation and more appreciation of dollar.

He said discount rate will also be increased which will increase the borrowing cost for the private sector. Since the private sector will not borrow loans, Pakistan’s economic activity will come to a standstill.

With increase in dollar appreciation, the cost of Pakistan’s 60 percent raw material import which is used for industrial production has increased manifold.

He said the government had depreciated the Pak Rupee value by over 36 percent with an aim to increase exports but unfortunately these had decreased by 11 percent. This, he said, can happen in a country where the imported materials stand at 25 percent.