Revamped Pakistan
I happen to be in a media talk which took place in Manchester where our Governor State Bank of Pakistan Reza Baqir delivered a historical speech; which spread like a wild fire not only in Pakistan but around the globe.
As it seemed, he was more worried for Overseas Pakistanis rather than innate Pakistani nation and then recent videos shared from official Twitter accounts of our incumbent government further revolted and added to miseries of general public.
Finance Minster’s top most priority is to stabilize the inflation rate but apparently it looks like this responsibility has been completely renounced since we are trying to make our Central Bank more powerful and delegating most of the authorities to it and that too, without any accountability and monitoring.
As per the rules and regulations of this bill, Premier of our country can be held accountable but not the Governor the State Bank. Our Central Bank is adopting the policies dictated by IMF in true letter and spirit and the government is gearing up and abiding by the policies before their next agenda meeting with IMF tentatively on 17th Dec 2021.
The recent bill has already been approved by the Federal Cabinet but as per IMF conditions it has to be approved by Parliament too, in order to release the funds.
IMF’s policies, have some serious problems eg undue the US treasury interference, challenging targets and demanding agenda.
IMF gives short-term ruthless targets and is only focused on short-term macro-economic trends and least bothered about the long-term developmental plans. Developing economies are already distressed and are not well equipped to afford curtailment policies.
The most familiar rules dictated by IMF involve privatization, increasing taxes to generate Government Revenue, market based exchange rate, adopting high interest rate, reducing import duties and subsidies.
Loans are mostly given to developing countries, but the policies are in favour of rich and developed countries like USA.But having said that, we cannot just entirely blame IMF and its policies because, Incumbent government has a larger role to play in the misery of general public, residing in Pakistan at the moment.
IMF advocates lowering the government spending but in just three years’ time it has increased to more than 16% and is forecast to increase even more.
IMF doesn’t stop us in forecasting our demand for electricity generation, and for that purpose the amount of Petroleum needed to be procured, the quantity of equipment needed to distribute our power supply and our demand for sugar, wheat etc and this mismanagement has caused very bad implications on our already trodden economy.
Pakistan’s inflation 9.74% is way too high compared, to our neighbouring countries India and Bangladesh, 6.62% and 5.69% respectively.
And their per capita GDP is also stronger as compared with Pakistan’s, which is only $1194 while Bangladesh stands at $1969 and India at $1901. If we do further comparison of oil prices as this has direct effect on inflation. In just one and a half months’ time Pakistan’s petrol price has been increased by 18.26% while in India there is only 2.9% increase and no change in petrol prices in Bangladesh. So any comparison vocalizations should be given in full context, so that it doesn’t affect the emotions of common man.
The Government should improve its capability in forecasting and planning, so that we do not pay hefty prices for mismanaged affairs and compromise on our sovereignty.
We are raising our foreign reserves in a very expensive way, which mostly instigates hot money cycle and with any disruption that currency will flow out of our country in just a matter of days.
The Government should initiate some revenue generating projects so that we could start to be self-reliant and would stop begging from IMF and fulfilling its demands.
The most peculiar thing with this $ 6 billion loan is the amount of demands been put forward and the acceptance of these unfavourable terms by our government.
Pakistan is perennial IMF borrower, but truthfully, the only IMF programme which got completed in the history of Pakistan was in 2013-16 during PML-N tenure; Ishaq Dar was able to negotiate the terms amicably with IMF ensuring no compromise like devaluation of rupee, hike in interest rate etc.
Despite same sort of $6 billion loan programme was extended by IMF in the said PMLN tenure, which was not only accomplished, but the country benefited from high 5.8% GDP growth rate, lowest food inflation of 2% in decades and low interest/policy rate of only 6.25%, stable rupee and best performing stock market in South Asia as well as double tax collection and low budget deficit despite financing of major operations against terrorism (Zarb-e-Azb and Radd-ul-Fasad) and Dharnas voicing for revamped Pakistan, but alas! In new Pakistan, middle class has been negatively affected due to failed economic policies which have pushed down 15 million people below the poverty line and increased the unemployment number by 20 million. So Revamped or Ruined?
—The writer is contributing columnist, based In London.
