Pakistan and IMF’s bear-hug
Pak-IMF relationship is quite a phenomenon that never fails to evoke controversy
Pak-IMF relationship is quite a phenomenon that never fails to evoke controversy. Interestingly, the resentment against the relationship usually emerges from Pakistan as throughout this association the IMF has remained tight-lipped.
As behooves an international; financial agency IMF is required to stay aloof as it is professionally expected of it yet sometime it expresses its assessment of Pakistan’s economy through dispassionate analysis that have over the years turned sour albeit brimming with optimism that look quite unnatural. As one of the members of IMF, Pakistan is recalcitrant falling back each time after receiving much needed financial assistance but IMF’s patience has never run out despite being the butt of criticism on every occasion it has come to financially rescue Pakistan.
Pakistan’s association with the IMF spans decades and it is a saga that reveals both side locked up in almost an eternal relationship with both of them showing clear signs of exhaustion.
The recent delay by IMF in finalising its review of the financial assistance programme to Pakistan is indicative of its dwindling patience with Pakistan that has resulted in IMF insisting of observance of very tough conditionalities that would make life miserable for the people of Pakistan who are already under tremendous duress.
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Pakistan has tried very hard to convince the IMF to relax its grip but to no avail and this hard line stance taken by it looks ominous for the country. The most worrying aspect is that almost all financial sources Pakistan utilised in the past have all started to toe IMF’s line implying the end of the road for Pakistan’s loan-sponsored economy.
The financial situation of the country aggravated in 1958 compelling it to approach the IMF in 1958 seeking financial assistance amounting to $25 million. When Pakistan first approached the IMF for financial assistance in 1958, its demand was for $25 million. This was followed by another in 1969 of $37.5 million, then $75 million and Ayub Khan’s government made draw-downs of $112 million overall.
From thereon it was a consistent tryst with the IMF and Pakistan ended up with the IFI thirty four times. Unfortunately, every resort to the IMF was unable to alter the structural issue of Pakistani economic system with the result that the country remained in the throes of economic instability. In between Pakistan had some free days also as between 2001 and 2008, the country was financially assisted by the US but failed to materialise the brief advantage resulting in going back to the IMF and ending up negotiating the largest ever loan of $7.3 billion with the IMF.
The unsavoury economic realities of Pakistan have made it already to exce¬ed the IMF’s quota for it by 210 per cent. The IMF’s justification for this liberality aims to support Pakistan’s policies to support the economy and save lives and livelihoods and to lay the foundations for strong, job-rich, and long-lasting growth that benefits all Pakistanis. However, the country has failed to acquire even a semblance of economic independence and currently it is described by an IMF assessment as a prolonged user while questioning the IMF’s relative generosity in granting waivers to Pakistan despite noncompliance with its conditions. This assessment noted that until 1998, the prevailing perception within IMF staff was that the principal IMF shareholders were not willing to take the risk of major turmoil in Pakistan that an interruption of IMF support might have caused.
Pakistan’s economic turmoil now appears almost endemic and many IMF analysts quietly admit that design weaknesses such as unrealistic macroeconomic projections, the pretence of toughness were symptomatic of attempts to find a face-saving way to justify continued len¬ding to Pakistan. It has now become evident that the IMF is mostly listening to the inside critics of the IMF about Pakistan and has abandoned the so-called appeasement attitude and is now tightening its screws. It is now openly conveying its dissatisfaction about the elitist conduct of Pakistani authorities and is bent upon compelling them to change their attitude and priorities. This change of attitude has put Pakistani financial handlers in a quandary who have consistently failed to take a firm stand about economic matters and act like a weather-cock refraining from formulating and following long-term policies aimed at sustainable development.
IMF and other international donors now realise that the malaise resides in the cumulative psyche of the country and is extremely deep rooted and requires tough measures to treat. IMF particularly is now convinced that Pakistani policy makers could only be made to see the reason once they are rudely jolted out of their torpor and that could only be possible through applying public pressure achieved through causing widespread financial jitters in the economy. This is precisely the policy followed currently that looks very problematic for the people but nothing short of it could convince the IMF