Pakistan’s vicious cycle of begging, by Imad
Zafar
Finally, Pakistan and the International
Monetary Fund have reached an agreement according to which the IMF will lend US$6
billion to Pakistan over a period of 30 months. According to the IMF statement, “Pakistan is facing a challenging economic
environment with lackluster growth, elevated inflation, high
indebtedness, and a weak external position.”
The government led by Pakistan Tehreek-e-Insaf
(PTI) has agreed to all the demands of the IMF, including that the exchange
rate is to be decided by the open market instead of the State Bank of Pakistan,
and the government will gradually reduce the subsidies offered to the public on
electricity and gas. Furthermore, it is expected that more indirect taxes will
be imposed on the masses in order to meet the tax-collection target, while the
share of revenue of the provinces will also be revised in the next National
Finance Commission Award meeting.
The terms and conditions set by the IMF are
very strict, and the government, with almost no investment or other plan to
attract revenue, seems to be trapped in a vicious cycle of debt. The economy
has been deteriorating ever since the self-created political crisis when the
military establishment ousted prime minister Nawaz Sharif in 2017 in a bid to
take state affairs into its own hands. Ever since, the economy has been in
shackles, and there is no sign of immediate relief for the masses yet. Even
after the announcement of the IMF bailout package the Pakistan Stock Exchange
did not show any positive signs; in fact, it lost a
further 937 index points, indicating that uncertainty is still
gripping the investment sector.
On the other hand, more levies on electricity
and gas and indirect taxes on the masses, who are already subject to the worst
inflation in a decade, will mean that the middle and lower middle
classes will eventually diminish, and this will not only mean an end to
the puppet government of the PTI but it could also prove to be the last nail in
the coffin of the establishment that has been taking a large chunk of the
nation’s resources in the name of defense for the last 71 years and has been
manipulating the political discourse of the country.
It is strange to see that there is no
reduction in the defense budget, and instead the focus is on minimizing the
subsidies given to the masses, such as energy-sector structural reforms. One
wonders why even international institutions like the IMF do not point toward
the most non-productive expenditures on defense. If the IMF can intervene in
Pakistan’s internal matters by directing it to free its currency from
central-bank control, then why can’t it simply point ask the country to cut its
defense spending? Why do even the international financial institutions act as
if they are being dictated to by the White House and are only interested in
somehow keeping Pakistan’s war business ticking by keeping it alive with aid?
By agreeing to the IMF demand of giving the
control of the rupee to the open market, the PTI government has in effect
agreed to the further devaluation of the currency, as from now on speculators
will control its value. Pakistan’s economy has already shrunk to $280 billion from $313 billion in one
year of PTI rule, and this step of further devaluing the currency will only
hamper the prospects of economic revival.
Now with the expected GDP growth rate of 3.3%,
which is even lower than under Sharif, when at times it was almost 6%, the
current government by raising interest rates and agreeing to devalue the
currency is hell-bent on further shrinking the economy.
The question also arises as to how,
after this government borrowed almost $6 billion from Saudi Arabia, the United
Arab Emirates and China, it was not able to rectify even a single thing in the
economy, it will be able to correct the course of the economy with another $6
billion in aid from the IMF. Unless the unnecessary expenses on defense are
curtailed and an agriculture tax is imposed, nothing will change, and with the
current economic condition Pakistan will easily fall prey to the US and will
again soon be fighting proxy battles for Washington and Riyadh in order to survive.
As far as the masses are concerned, they are
already bearing the brunt in the form of major price increases and
unemployment. For most Pakistanis, life is all about breathing another moment
and feeding themselves for one more day.
The artificial political discourse created by
the establishment has destroyed the economy, which was going very will until
2017. It was the desire to control the political discourse of the country by
the establishment and politicians like Imran Khan and Asif Zardari lending a hand to
undermine democracy that have resulted in an economic turmoil that is slowly
and gradually weakening the country, and now even institutions like the IMF are
dictating to Pakistan what to do and what not to do. The “traitorous” and
“corrupt” Sharif was able not only to maintain a prolific GDP growth rate, but
he smartly aligned with China and Russia and gradually got Pakistan out of the
clutches of Washington and its proxy financial institutions.
This has been the tragedy of Pakistan since
the beginning, that the military establishment has enjoyed the status of a
sacred cow, while it terms popular leaders like Zulfikar Bhutto and Nawaz
Sharif traitors only to assert its own authority on state resources, and
puppets like Asghar Khan and Imran Khan have been declared
patriots and clean of any corruption because they are weak and incapable of
governance and therefore cannot challenge the hegemony of the establishment.
Unless the establishment realizes that in a bid to assert its authority it has
brought the state to the brink of an abyss, nothing will change, and Pakistan
will never be able to leave the begging bowl.
No comments:
Post a Comment