THE Human Rights Watch (HRW) has highlighted an issue that has long been agitating the minds of ordinary people in Pakistan – implications of the IMF deal both for the national economy and individual citizens. In a statement, it urged the Fund to work with the government by broadening social protection systems and minimizing reform measures that risk further harm to the most vulnerable people. It pointed out that with poverty, inflation and unemployment soaring, Pakistan is facing one of the worst economic crises in its history, jeopardizing millions of people’s rights to health, food and an adequate standard of living.
The prediction of the HRW is reflective of the ground realities and a track re-cord of engagement of various countries including Pakistan with the IMF as prescriptions imposed by the lender never helped the economy of any country and instead added to the woes of their people, especially vulnerable segments of the society. In theory, the IMF helps promote global macroeconomic and financial stability and provides policy advice and capacity development support to help countries build and maintain strong economies but the tools used to advance these objectives complicate things for aid recipients. This is also borne out by Pakistan’s own experience of dealing with the Fund and it was because of the negative impact of various deals that almost all governments of the time declared they would not return back to the Fund, a commitment none of them could fulfil because of fragile economic conditions, internal weaknesses and over-dependence on foreign assistance.
As for the stalled deal and the prospects of its revival, the country is already witnessing the worst kind of price-hike and sharp compression of family incomes and the kind of conditions that the IMF is bent on imposing on the Pakistan Government are likely to exacerbate things further. Oil prices are coming down worldwide but the IMF is insisting on further hikes despite a massive raise that the Government announced in the last days of January. It is also pressurizing the authorities concerned to increase tariff of gas and electricity while the rupee has been devalued to such an extent that experts unanimously agree it is now grossly under-valued. We believe a cut in expenditure would be the most viable option than depriving the poor of legitimate protection through subsidies, frequent hikes in energy tariff and undue taxes on POL products. It is also strange that on the one hand, the IMF is asking the Government to save money through different means but on the other hand it is pressurizing to allow free for all imports at a time when the country is almost empty-handed as far as foreign exchange is concerned. This pressure has to be resisted in view of the cash position.