The IMF might not be the Devil we think it is
Newly elected and for some, selected government, inherited an economy in crisis. Balance of payment, circular debt, rising imports and countless other issues were already there.
In that case, new government had no choice, other than to borrow money from different monetary institutions of the world and from friendly states. But, aid from others always come with a lot of strings attached to it. There is no free lunch in this globalized world.
Pakistan has always tried its luck with Saudi Arabia and China. This time too, PTI’s government went to KSA to ask for help. They, indeed, agreed to help; providing $6B as immediate assistance. But, what’s been asked of Pakistan, in return, is still not revealed. Opposition is questioning the government’s intentions, as the government has not yet taken parliament into confidence, on deal with KSA. Despite right to information act, people of Pakistan are also unaware of the KSA aid package’s details. Every hidden detail makes the package open to speculations.
International Monetary Fund(IMF) has never been praised by the developing countries. It has always been labelled as a foreign institution, trying to dictate policies. Though, it’s not true. Many countries have flourished because of the assistance from IMF. It’s always about the policies of your own. In Pakistan, IMF never enjoys a warm welcome from critics. Critics often emphasized that IMF’s assistance slows down the economic process, and it hurts the poor. But, government has no other option left. Government will go for the assistance coming from IMF. Government should keep in mind the ongoing tussle between China and US, over world economy. IMF can’t approve the aid by over ruling US. IMF asking about the details of China Pakistan Economic Corridor, irritates Pakistan’s long-term friend, China. And this makes Pak-China relations, vulnerable.
But the questions remains, was the IMF really worse than Saudi Arabia? Does the IMF “forces” Pakistani government to impose more taxes on people? The IMF is a structural reforms institution, that provides bail outs and helps economies improve themselves. But for long the Pakistani government has resisted any change the IMF may have wanted. The IMF wants Pakistan to increase its state revenue, and the solution IMF provides is improving the FBR and collecting income tax. But this requires effort and reforms on part of Pakistan, which we really don’t want to do. So instead to increase revenue, the government imposed taxes on consumer goods. This way everyone has to pay more taxes to cover up for the cost of tax evaders. By going to Saudi Arabia, the government made sure that the IMF can’t push for “harsher” reforms (reforms that the economy actually needs to become sustainable).
It remains to be seen how these “free loans” will cost us!
Contributor: Muneeb Khan