IMF is being unfair

Pakistan imports coal and the price of coal in the international market has gone up by 5 times. Pakistan imports gas and the price of gas in the international market has gone up by 10 times. Pakistan imports oil and the average international price of crude has gone up from $65 dollar per barrel in 2018 to $120 per barrel. Over the past year, Pakistan’s oil import bill has gone up a whopping 100 percent.

Pakistan’s largest export items are bed linen, table linen, toilet linen and kitchen linen collectively worth roughly $4 billion.

Pakistan’s next biggest export is rice, around $2 billion. Then there’s non-knit men’s wear around $1.7 billion followed by non-knit women’s wear around $1 billion.

The prices of Pakistan’s major imports from the international market have gone up in price many times over. The prices of Pakistan’s major exports to the international market have gone up only marginally. Result: In May 2022, Pakistan’s current account deficit hit a high of $1.4 billion compared to $640 million in May 2021; up 2.2 times in just one year.

Clearly, the prices of Pakistan’s major imports from the international market are not in Pakistan’s control. Then there’s an ‘ex-energy commodity supercycle’. Remember, Pakistan imports some $8 billion of food items-wheat, edible oil, tea and pulses.

The energy price shock in-tandem with the commodity supercycle is causing chaos across the developing world. External accounts of almost all non-oil exporting developing countries are under severe strain. There are protests and social unrest in Sri Lanka, Ecuador, Nepal, Argentina, Ghana, Egypt, Zimbabwe, Laos, South Korea, Spain, Yemen, Myanmar, Haiti, Kenya, Tunisia and Burkina Faso. IMF client states, Argentina, Ecuador and Zambia risk potentially disastrous defaults.

Fuel bills and food costs are going up like never before. According to the IMF “global economic growth is projected to slow by 40 percent, to 3.6 percent this year and next.”

In IMF client states people are being forced to skip meals. In IMF client states people are being forced to sell their kidneys. And the IMF has been churning out a new list of ‘prior actions’ almost on a monthly basis.

Social unrest has serious consequences. The IMF is interested in recovery but social unrest will become a major barrier to recovery. As the IMF is busy churning out a new list of ‘prior actions’ social unrest is rising adding to risks for the global economy. The IMF should not under any circumstance become an instigator of riots, protests and social unrest. Surely, the IMF “cannot be blamed for food shortages caused by harvest failure, the Fund can certainly be blamed for food riots caused by policies designed to achieve unnecessary ends or ends that can be achieved by other less painful means.”