Dr. Akbar Zaidi* in his article published in Dawn has said rightly, “Such agreements might temporarily rescue governments and their economies, but these are always anti-people with deep and deleterious long-term consequences”.
He has also identified, “Perhaps the government of Pakistan chose not to read carefully beyond the headline as it highlighted numerous uncomfortable truths”.
He continues with, “On top of this, the IMF insists that the governments need to increase electricity prices and taxes on petroleum products even further, as well as keeping interest rates high.
Countries generally facing balance of payment crisis go to the IMF, known as ‘lender of last resort’. The revival of Pakistan’s agreement with the IMF was ‘sure’, after the story of Army Chief General Bajwa contacting the US Administration hit the newspapers headlines.
One tends to disagree with Dr. Zaidi’s when he says, “It was quite irrelevant since the agreement between the Government of Pakistan and the IMF was already well in place and even the request from the COAS had little value to add at this late stage”.
I am delighted with the admission of Dr, Zaidi, “The agreement which has been reached is not a new one, and is the revival, with additional, stricter, conditionalities”.
Dr. Zaidi’s statement should be an eye opener for the ruling elite, “Celebrating receipt of a mere US$1.1 billion is a sign of how low our expectations and standards have fallen”.
While there was a possibility of a default, mostly on account of our own collective doing, the revival of the program allows only very short-lived breathing space. The deep-rooted, chronic, structural problems which affect the economy, have barely been articulated, let alone addressed.
Dr. Zaidi deserve a salute for saying, “All adjustments and actions taken in the last four months by the incumbent government were to ensure that they secure the loan. Now that they have, they have the opportunity to sit on their false laurels and easily avoid taking measures which are even more unpopular than the ones they have already taken”.
The preconditions end up raising taxes (usually regressive ones, such as indirect taxes), cutting expenditure (always development), increasing electricity and gas tariffs and other essentials, are meant to slow down aggregate demand and the economy.
With the damage caused by the floods to the economy estimated to be 10 times the amount received from the IMF, this latest rescue package is not going to rescue the people of Pakistan.
*Dr. Akbar Zaidi is a political economist and heads the IBA, Karachi.
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