Discuss in the context of political economy.
Pakistan is a member of the international monetary fund since 1950 and Pakistan has received almost twenty times loans, has done the 13th structural adjustment so far from 1988 but if we look at the economy of Pakistan it needs to renew its loan program. After every successful program of any government, the next government has to look for foreign aids again, and it clearly shows that these initiatives are not working and meeting their goals rather it Is increasing the economic burdens in the form of loan repayments, increasing energy tariffs, adding more tax on public and cutting the development fund to minimize the budget deficit.
Temporary sign of relief without long term effective policy
every government in their new fiscal year went to IMF before the budget just to adjust the budget deficiency which it has come across due to multiple problems the governance structure. Government spending is more than its income. The export of Pakistan is estimated to be 24 billion dollars which are not sufficient to make the balance of payment against the import of dollar 60 billion. The means of production is less and we don’t have any high value-added product for the international market. Being an agrarian base economy and country the quality and efficiency of the production do not affect and as per international standards which is the effects of lacking technological enhancement of agriculture sector and poor research and development to increase the production using minimum land rather Pakistan is not producing as much it uses concerning land and water consumptions’ bailout packages aims always has remained to minimize the deficit and give stability of the economy for the time it does not work for sustainable development and rather put pressure on the economy in the form of policies and structural adjustment according to their will.
Structural readjustment and greater economic implications
From 1988 until today IMF has done thirteen times structural readjustment of the public institution.it always forces the government to gain macroeconomic stability at the cost of spending less on PSDP (Public sector development programs), increasing tariffs on the energy sector to gain more revenue, imposing a more direct and indirect tax on consumer services and products, as a result, it creates economic hoax and inflation in the country. The micro economy suffers more and people largely get affected by these measures. Basic commodities like grocery and fuels price get high which made it unaffordable to the common man. It gives recommendations for the privatization of the state own enterprises to gain an amount to pay back the debt with interest and to increase the government account balance for the distribution of budget. It also suggests the devaluation of currency against dollar which increase the debt automatically and making government less able to import more and decrease the value of country’s products which increases the rate of exports but at the other hand the raw material get more expensive as they have to be borrowed from other countries with less valuable currency against the international trading dollar equalizes the gain and lose hence it does not benefit the economy. Loan repayment is a great headache for any country because we pay more than what we received from them according to the united nation convention more than 200 billion dollars of money flow from underdeveloped countries to the developed countries which is a surplus of more than 8 dollars per dollar they have given in loan, they received these amounts in the form of capital flow, loan payment back and investment in the safe horizon of developed state from the corrupt authorities in under-developing nations means it is the form of investment for these organization and donor state.
IMF Approval a prerequisite for other aiding agencies
International monetary fund as the leading organization having 190-member state for the development of trade and economic stability in less developing countries. All other organizations follow the standard of IMF and recognized it as a stand to measure the economic infrastructure of any country before trusting on them for lending funds and facilitating in other development and non-developmental; projects such like WB(world bank) ,ADB(Asian development bank) and EU(European union).FATF(financial action task force) is also working closely with IMF as they have put Pakistan in to the grey list for terror financing obligations and not countering money laundering which became the source of terror funding through black and illegal money and these crimes causes greatly for the stability of any state which as a result have repercussions on the economic development and stability and is a threat to the whole world. Money laundering is an obstacle and major cause of poor affects of IMF packages as the money the developing world receives for the human development and social development get back to these developed worlds through investing in their interest base projects and taking commission through bargaining with the contractors and using their own industrial products in the projects such like cement, and other raw materials. They develop policies of their own interest side-lining the need of the people and doing projects which is a liability to the account and every year have o pay subsidies instead of becoming an asset to increase the earning of national income
Control on policies and Architect of our future
Once you have taken the loan now you have to follow certain measures prescribed by these institutions without having any know-how of the country, people, customs traditions, religious believes, and needs of people now they are the architect of the future of these developing states. They would try to impose all the policies which are greatly working on their countries like the economic system of capitalism, increasing interest rate to minimize inflation, currency value according to the market and liberty of business opportunities which can have no positive effects on our state rather it would add in the complexities than resolving the issues. These institutions fully gain power in our state shaping the policies that they think suitable without having any consent from the local people. It just likes feeding someone instead of teaching them how to caches fishes, for the time being, the conditions would be better but no state can run on these policies for the long term. It can affect state sovereignty of making foreign policies and engaging with any other country for trade and partnership, before taking any step now it is necessary to get their consent on the issue if abiding by their suggestions are necessary if not then we may face strong economic recessions which we can’t afford in this time of dangling economic conditions. As an example, the IMF and World Bank did not agree to help us in building the Diamer Basha dam due to protecting Indian stance and side-lining our interest as we are in need of such projects for our energy sector and resolving water crisis which shows that it does not care of the interest of the subject state rather it is securing their say and influence in another state.
A friendly Fire and discouraging pluralist approach
Friendly fire is done in a time of war and high pressure that you kill the people whom you are supposed to protect. The IMF packages are likely this, as despite being given the actual amount and direct cash we do not see any significant developmental effects in a result. It stops the people to think of how to improve their conditions it does not let people think a strive on their own because by these aids the government officials get their salaries with increased bonuses from the government and the government gets foreign reserves to buy and feed the people what they need. It generates vast gaps in income which increase the poverty level and middle-class people get disappeared through them the system of development, raising voice for the deprivations and check and balance works. People would not be standing for implementing proper economy as the money which was misuse does not belong to them then why should they care as it is according to human psyche people struggle and more conscious for the thing, they lose than what they receive. By pluralist approach, mutual agreement base decisions are taken but the organization which lends money try to impose what they feel better according to their interest.
We have tried the same solution of economic stability over and over again but the results are in front of us, the situations are the same and the same problem we are facing what we used to face decades above it means we have to take emergency and revolutionary measures to get out of this trap. We as a country have greater potential then what we are now, the sole reason for our economic deprivations is the Good system of Governance, once it is getting set all the problems would disappear and we would be in the row of developed nations and for it we have to take steps because there is no free lunch.
Adnan Haider (Telecom Engineer from UET Taxila) From: Kharmang Baltistan