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Monday January 30, 2023

Blame the IMF

November 07, 2021

Petrol has gone up to Rs146. Blame the IMF. The price of wheat flour has gone up from Rs35 a kilogram three years ago to Rs70 per kilogram. Blame the IMF. The price of sugar has gone up from Rs55 a kilogram three years ago to Rs150 per kilogram. It's the IMF’s fault. The price of electricity has gone up from Rs10 a unit three years ago to Rs22 a unit. It’s the IMF’s fault. Our rupee has fallen from Rs123-to-a-dollar three years ago to Rs170 to-a-dollar. It’s the IMF’s fault. Is it really?

Question number 1: Did the IMF advise our government to lose Rs750 billion in the government’s ‘commodity operations’? Question number 2: Did the IMF advise our government to export 1.1 million metric tons of sugar (when there actually was a shortage in Pakistan)? Question number 3: Did the IMF advise the government of Punjab to pay out Rs3 billion worth of subsidies to the sugar mill owners? Question number 4: Is it under the IMF’s advice that our government is allowing Rs400 billion worth of electricity theft a year? Question number 5: Did the IMF advise our government to buy the most expensive electricity on the face of the planet? Question number 6: Is it under the IMF’s advice that we are restricting our exports to $2 billion a month and importing goods and services worth $6.5 billion a month?

Never has the IMF ever asked any of its member countries to devalue its currency. The prescription has always been ‘let the market decide’. Never has the IMF ever asked any of its member-countries to raise the electricity tariff. The prescription has always been ‘recover the full cost of production’. Never has the IMF ever asked any of its member-countries to protect cartels. The prescription has always been ‘competitive pricing’.

Yes, the IMF is both a financial entity and a political tool – a tool in the hands of its shareholders. Yes, the IMF’s largest shareholder is the United States of America with a total of 831,401 votes. Surely, the US has an agenda – and so does the IMF. To be certain, no one puts a gun to our head to go to the IMF. We go to the IMF because of our own blunders, mistakes, absurdities, follies, irrationalities and goof-ups.

Jeffrey Sachs, a noted American economist, once said that the IMF’s “usual prescription is budgetary belt tightening to countries who are much too poor to own belts.” Joseph Stiglitz, the Nobel Prize-winning economist, denounced the IMF as a “primary culprit in the failed development policies implemented in some of the world’s poorest countries”, adding that “many of the economic reforms the IMF required as conditions for its lending – fiscal austerity, high interest rates, trade liberalisation, privatisation, and open capital markets – have often been counterproductive for target economies and devastating for local populations.”

Pakistan has signed 23 arrangements with the IMF since we became a member in 1950. Why do we think that the IMF was created to solve Pakistan’s economic problems? Has the IMF solved any member country’s economic problems over the past 75 years? Pakistan’s problems can only be solved by Pakistan’s own leaders – and when our own leaders fail in their obligations to their voters the IMF is turned into the perfect scapegoat. Who said, “To err is human – and to blame the IMF is even more so?”

The writer is a columnist based in Islamabad.

Email: farrukh15@hotmail.com Twitter: @saleemfarrukh

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