Daily Times

Last week, making an unprecedented move, the resident representative of the International Monetary Fund (IMF), Esther Perez Ruiz, met Pakistan’s politicians, from both treasury and opposition benches, to seek their support for policy objectives envisioned in the proposed $3 billion Stand-By Agreement arranged for nine months.

Though the IMF’s representative considered it necessary to seek the support of politicians before the final approval of the agreement on July 12 by the IMF Executive Board, the meetings exuded three main messages. First, the general elections would take place this year on time. Second, the Pakistan Tehreke Insaf was still relevant politically. Third, the IMF was no more indifferent to Pakistan’s internal matters, economic and political.

One plausible reason for the IMF’s attentiveness could be the situation of Sri Lanka after default on repayment of external debt, the balance of payment crisis owing to depleted foreign currency reserves in April 2022. For the IMF, Sri Lanka’s sovereign default incurred two kinds of criticism. First, the IMF failed to secure the investors’ funds, which got ruined by the fall of the Lankan economy. Second, the IMF remained dissociated from the concerns of people who had been grumbling at misplaced economic policies and complaining about inappropriate financial spending of the ruling regimes for at least the past decade. The confidence between the Lankan rulers and the citizens deteriorated gravely after 2019.

Generally speaking, there are two features found shared between developing countries. First, they try to follow the administrative itineraries of their former colonial masters but on their local terms. That is, they yearn for practising democracy but they try to suppress dissenting voices by resorting to state oppression. Second, they try to run their economies along capitalist lines but they do so by controlling capitalist trends coercively. In South Asia, India and Bangladesh have been shedding the shared features, but Pakistan and Sri Lanka still stick to them.

Ruling regimes are cohabited by powerful institutions, such as the judiciary and army, which hoard power and rely on dictation.

The main reason for Pakistan’s failure in shedding the shared abominable features is the temptation of the ruling class to wield power and decide on the destiny of the people. Ruling regimes are cohabited by powerful institutions such as the judiciary and army, which hoard power and rely on dictation. The frequent rise in salaries, post-retirement perks, and extensions in the service tenure are norms. Dividends are shared at the cost of the pockets of the multitude. The nexus between the powerful gets reinforced after a few years by replacing one government with the other.

The malpractice has fashioned a gulf between the rulers and the masses. The rulers try to secure their wealth abroad in remittance for investment and stashing, but they seek more loans from the lending agencies including the IMF, World Bank, and Asian Bank to run the country. The masses, however, avoid paying taxes in retaliation. Between the two extremes gets caught is the loan giver, the IMF. The rulers say that we cannot service the debt; the masses say that we cannot pay taxes. The consequent disconnect brought Pakistan to the verge of default.

By securing the Stand-By Agreement on the last day, June 30, Pakistan narrowly escaped default and the torment of restructuring the economy. The irony is that the budget for the fiscal year 2023-24 militated against the concept of austerity. Hardly any measure for reducing non-developmental expenditures was taken.

The IMF’s initiative to micromanage Pakistan this time heralds possibilities for more micromanagement in the future. The apparent plausible reason could be to ensure the safe recovery of its loans with interest. From the example of Sri Lanka, the IMF has learnt that it has to do two things. First, if a ruling regime is not reducing its expenditures or increasing its earnings, the IMF has to help the regime to do so. For instance, the IMF has asked Pakistan to revise its budget for the fiscal year 2023-24 to make it fall into line with the IMF conditions. Though the ruling regime is finding it difficult to reduce expenditures, plans for selling assets (or leasing out lands and services) are underway to increase income. The flawed preference of selling and leasing out is bound to cost the poor a lot in the coming years. Second, empower the people who would knock down the lavish spending practices of any ruling powerful class.

Following the IMF, the European Union (EU) has also stepped in. On July 8, EU Ambassador to Pakistan Dr Riina Kionka issued a video statement and reminded Pakistan of the relationship between the Generalized Scheme of Preferences Plus (GSP plus) and Pakistan’s obligations towards respecting human rights including the freedom of media, freedom of expression, freedom of women and minorities, and labour rights. Whereas the GSP offers a developing country like Pakistan a special incentive arrangement for sustainable development and good governance, the GSP-Plus makes it obligatory for eligible countries to implement 27 international conventions on human rights and labour rights.

This is disappointing news for the specially arranged meeting of the 81st Formation Commanders on June 7. Through a statement, the huddle ridiculed and discounted the significance of human rights. Similarly, this is unacceptable news for the DG ISPR, who held a press conference on June 26 and kept insisting on trying civilians in the army courts.

Pakistan’s current GSP plus status would expire on December 31, 2023. The renewal would be in light of Pakistan’s past performance on human rights and labour rights. Pakistan’s failure to satisfy the EU would mean Pakistan’s entitlement to duty-free treatment of its exported goods related to textiles, leather, footwear, etc., would end.

Hitherto, the IMF has concluded that without the willingness of people to own an agreement, the IMF cannot recover its invested amount. The EU has concluded that without granting freedom and rights to people, it is useless to grant any special status to Pakistan. Whereas Pakistan’s economic woes refuse to die, one thing has appeared clearly: Pakistan cannot escape micromanagement from international institutions and organizations in the future.

Keep on experimenting with Pakistan. Keep on carousing in high disbursements. Keep on denying people their democratic rights. Keep on subduing the freedom of expression. Keep on deriding the existence of human rights. Initial few signs of the erosion of Pakistan’s sovereignty have appeared. The masses are bystanders.

The writer can be reached at qaisarrashid @yahoo.com.