Ed­i­tor’s Desk

Enterprise - - Contents -

Pak­istan has been suf­fer­ing from eco­nomic crises since its in­cep­tion. There are var­i­ous rea­sons be­hind the plight of Pak­istan econ­omy mainly cor­rupt gov­ern­ment and lead­ers, lack of strate­gic fi­nan­cial poli­cies, lack of ed­u­ca­tion, lack of ex­ports and large num­ber of im­ports, dereg­u­la­tion of fi­nan­cial in­sti­tu­tions, ter­ror­ism, power crises, po­lit­i­cal strife and much more. To keep the bal­ance of pay­ments in check and to meet the fi­nan­cial obli­ga­tions, the gov­ern­ment of Pak­istan has un­for­tu­nately al­ways re­sorted to tak­ing loans. This is where IMF, ADB and other such in­sti­tu­tions come into play in Pak­istan’s econ­omy.

The aim of the IMF is to pro­mote in­ter­na­tional trade and mon­e­tary co­op­er­a­tion and also the sta­bi­liza­tion of ex­change rates. Over the past years, the In­ter­na­tional Mon­e­tary Fund (IMF) has emerged as a key player, which has greatly in­flu­enced Pak­istan’s macroe­co­nomic poli­cies. Since the late 1980s, it has been im­pos­ing var­i­ous con­di­tions on many gov­ern­ments who have been greatly crip­pled by debt ser­vic­ing, in­clud­ing Pak­istan.

The pur­pose of the gov­ern­ment of Pak­istan to take loans from the IMF was to sta­bi­lize the de­te­ri­o­rat­ing econ­omy and ex­change rates. IMF pro­vides huge amount of loans for such pur­poses, which seems very lu­cra­tive and at­trac­tive of­fer at first sight from a short-term per­spec­tive. How­ever there is no free lunch. IMF pro­vides loans in ex­change of many de­mands and con­di­tions, which are to be ful­filled to get the loans. Typ­i­cal IMF con­di­tions com­prise con­tract based macroe­co­nomic poli­cies (fis­cal and mon­e­tary), in­fla­tion tar­get­ing poli­cies, fi­nan­cial dereg­u­la­tion and in­creased open­ness to in­ter­na­tional cap­i­tal flows, trade lib­er­al­iza­tion (in­clud­ing re­duc­tion of tar­iff and non­tar­iff bar­ri­ers) and pri­va­ti­za­tion of pub­lic-sec­tor en­ter­prises.

In short they ac­tu­ally cap­i­tal­ize all the ma­jor sec­tors of the coun­try and make sure that the coun­try will never be able to get out of their hands. For a coun­try like Pak­istan th­ese se­vere and rigid con­di­tions are bound to make them the per­ma­nent slave of IMF. They dic­tate their own terms and poli­cies in ex­change of ev­ery loan, which in­creases the de­te­ri­o­ra­tion of the econ­omy and ex­change rates rather than sta­bi­liz­ing it. Ide­ally, huge loans from IMF should have sta­bi­lized the Pak­istan econ­omy and bal­ance of pay­ment by now but the con­di­tion of the econ­omy and ex­change rates are not even close to get­ting sta­bi­lized.

Why is tak­ing huge loans from IMF not pay­ing off? The an­swer is some­how not get­ting into the mind of gov­ern­ment pol­icy mak­ers. G8 coun­tries are con­trol­ling IMF. They have made con­di­tions and poli­cies, which are ac­cord­ing to their own eco­nomic con­di­tions. They are very de­vel­oped, ad­vanced and ed­u­cated coun­tries. They cope with all the terms and con­di­tions of IMF quite eas­ily. How­ever, un­der -de­vel­oped coun­tries like Pak­istan have limited re­sources and lack of strate­gic poli­cies. They eas­ily be­come vic­tims of se­vere terms and con­di­tions and lose ev­ery­thing in­clud­ing their sovereignty and con­trol over state. The con­di­tion of Pak­istan’s econ­omy is a stark ex­am­ple of what hap­pened to un­der­de­vel­oped coun­tries that made the grave mis­take of tak­ing loans from IMF. So what can we do to sta­bi­lize our econ­omy with­out tak­ing loans from IMF? The an­swer is that we re­ally need to stop be­ing a slave of IMF. We need to stop re­ly­ing on them. We need to amend our poli­cies. What we re­ally need is hon­est and well ed­u­cated peo­ple at the top level who can make ef­fec­tive and vi­able strate­gic poli­cies to over­come the bud­get deficit with­out tak­ing loans. We need to in­crease our ex­ports. We need to be self-suf­fi­cient as loans are no more the so­lu­tion of sta­bi­liz­ing the econ­omy. They will only put more weight on our al­ready crushed econ­omy.

With ef­fec­tive uti­liza­tion of re­sources, hon­est and ed­u­cated loyal lead­ers and ef­fec­tive strate­gic poli­cies, there is no way we can­not im­prove our econ­omy and ex­change rates. Soon we could be in the list of de­vel­oped coun­tries but only if we say goodbye to IMF and re­ally start work­ing to im­prove our econ­omy in a self-suf­fi­cient man­ner.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.