Daily Times

“To our misfortune, we have won”, were the historic words of Poland’s Walesa when the Solidarity won after first of its kind revolution in the former Soviet Empire’s satellite state was able to turn the tables. Spearheaded by Lech Walesa, the movement promised independence and end of authoritarianism. However, with $400 in debt and inflation soaring at 600 percent the new government was now confronted with a herculean task: undoing the doing of the previous government. This situation from 1980s finds a stark similarity to what had transpired in Pakistan. Notwithstanding the promises the government now faces an extreme dilemma like of Poland’s whose finance minister fainted while announcing the new budget due to acute fatigue.

IK’s government has promised many promising reforms. From the beginning, however, it was the economic turf where the dexterity of the incumbent government was supposed to be tested. Now, with recent devaluation in Pakistani rupee, increase in interest rates and the growing possibility of going to IMF, has led to many voicing their disappointment with these measures and blaming the incumbent government. But like the Solidarity movement it is not a change of intention for government’s part; it is a classic case which embodies the extent of autonomy a government might cherish in this globalized world and the magnitude of influence and power of the international financial institutions.

The erstwhile government, inter alia, left Pakistan mired in debt, a balance of payment crisis exacerbating with ever growing chasm between imports and exports further increasing the trade deficit and therefore, overall current account deficit. Our foreign exchange reserves have dropped further to $8 billion from $9 billion, barely enough to cover 53 days of imports. Even the endeavors to try some of our friends, Kingdom of Saudi Arabia and China, didn’t prove that fruitful moreover, foreign investment is different from receiving a loan to balance one’s Foreign Exchange Reserves. The odds for turning to the lender of the last resort were always there, now it is approaching nigh.

Here it is important to discuss the power of IMF and its track record of performance. The reason why Poland’s Solidarity was not able to fulfill its promises was that they were outmaneuvered by the Fund’s policy and Jeffrey Sach’s economic shock plan. The newly elected government had no other choice given the economic straitjacket they found themselves in but to succumb with the hope that the future might hold some improvement.

African National Congress (ANC) and Freedom Charter formed by Nelson Mandela suffered similar fate in South Africa. Tricked by the opposition leader De Klerk of the National Party ANC couldn’t see that while they were getting political freedom they were being stripped of the crucial economic power as the negotiations ended up in ANC unwantedly agreeing to implement Washington Consensus policies. If then, they wanted to create jobs and start closed factories they couldn’t do so as WTO made it illegal to subsidize plants and factories. Their hands were tied, there were caveats. Once again this doesn’t mean to doubt the drive, purpose and intention of Mandela’s government but reaffirms the fact that there are certain limits to what you can and cannot do in a certain context within a given situation.

Pakistan’s economy is in a very perilous state of-late. We can only make it better once we have the time and opportunity; this is exactly what we are doing by going to IMF: buying time

So, when we raised interest rates all of a sudden or the precipitous fall in Rupee value against dollar, it isn’t happening with government’s volition rather it is the conditions imposed upon us. Criticizing the policies of IMF or other institutes is not in the scope of this article. But the reason to hint towards, what may be termed, the one sided relationship the countries at times find themselves with such institutions underlines the significance of the fact that before blaming we should know what is the reason behind a certain action.

There are times when countries and leaders have to make unpopular and harsh decisions but to let those few decisions infect your optimism is a sign of weakness. Pakistan’s economy is in a very perilous state of-late. We can only make it better once we have the time and opportunity; this is exactly what we are doing by going to IMF: buying time. Moreover, the recent rise in international oil prices can be put under the rubric of bad luck. We might see a rise in petrol prices at pump.

However, a Panglossian outlook should not obfuscate our strategy and constancy to the purpose which is to steer the economy away from the brink of collapse towards a stable ground. It is the duty of the current government that once we get a bailout package, to find and devise ways which can help the country to reach a stage that avoids another bailout. There are practical examples, like Ethiopia and Malaysia that did so.

Solidarity had won 260 seats out of 261 form which the party’s candidates ran in 1980s. However, in 1993, a coalition of parties was able to get as much as 60 percent of votes with Solidarity now split into various factions, with the main party just mustering 10 percent.

We should not let that happen here.

The writer is a freelance columnist. He can be reached at osamarizvi10@hotmail.com

Published in Daily Times, October 19^th 2018.