Daily Times

In continuation of my previous article ‘Pakistan and IMF’s dispenser boys’ (Daily Times May 22) I had reviewed the post IMF signing of the deal. Eminent economist Prof. Syed Akbar Zaidi believes that it is important to emphasise that it is not the IMF which is to blame for Pakistan’s pathetic economic condition – not for the past nor for where it is now, and also not for what is about to come in next few years. He warns that ‘Pakistan’s economy is going to be severely constrained over the next few years, with higher inflation, more unemployment and lower growth, with a far greater burden on working people than what has been the case for many years.’ Indeed, IMF cannot be blamed entirely for such a pathetic state of Pakistan’s economy. Much is contributed by fixing square pegs in round holes-most of the time chartered accountants or bureaucrats of account service having practiced all their lives art of avoiding tax or calculating 2 plus 2 as equal to five.

‘IMF or more IMF packages– Pakistan’s economy is going to be severely constrained over the next few years. The entire responsibility for the disaster lies squarely on shoulders of Pakistan’s ruling oligarchy and propertied elite, including civilian and in uniform that have been monopolising control over power. Civilians – politicians etc are constantly targeted for corruption, the most corrupt, however, been the generals who remain unaccounted for. In order to have sustainable economy, there should be no ambiguity about apportioning blame and responsibility for rendering Pakistan into an Aegean stables. No doubt one can lay blame for many things on IMF’s door mat but most of the mess has been contributed by the failure of successive governments and Praetorian partners in the game of status quo.

When the government does not tax its rich, launders their ill-gotten wealth through Amnesty Schemes one after another, it has to run short of money to spend, no matter how well intentioned and well meaning its social welfare programmes may be

Akbar Zaidi rightly says ‘It is not the IMF which has brought Pakistan’s economy to its knees, to rock bottom, not the IMF which has forced Pakistan to beg for money from supposedly friendly countries, and certainly not the IMF which has made the government of Pakistan finally run to the IMF for loans. The ruling elite, those who hold office and those who hold the strings of those who hold office, are all responsible for managing the economy the way they have over the last few years and over the last decades. This truth can be clearly explained by one simple economic policy measure and non-measure. Strangely no one has the guts to discuss or deliberate rationalisation of the defence budget that has proved to be pyrrhic. Much before the military government of Gen Pervez Musharraf, before and after him civilian governments and now the selected prime minister–all have been oing their IMF yatras and seeking a ‘bailout’ and assistance to stop the country’s deteriorating economic condition. Actually, it is the money that they need for the defence. Here is a consensus among independent economists that country has been forced to go to IMF by the successive governments, along with their allies, coalition partners and vested interests. The reason being their failure to undertake economic reforms since these would hurt their own interests. “One key indicator regarding the state of the economy is that of fiscal deficit, that of having greater, unaffordable expenditure and lower revenue or having insufficient money to spend.”

When the government does not tax its rich, launders their ill-gotten wealth through Amnesty Schemes one after another, it has to run short of money to spend, no matter how well intentioned and well meaning its social welfare programmes may be. If it has high and increasing defence costs and has to pay back interest on loans taken to pay for defence and other expenditures, it will always have a shortfall of money because it refuses to tax the rich. With no taxes on the rich and the elite, in relation to Pakistan’s political economy based on essential defence expenditures, and with a shortfall of revenue, there will only be more borrowing, more debt, and so on-sooner than later Beggars Bowl would become our national mascot. Answer to such a situation demands the urgent need for taxing the rich and slashing drastically defence budget.

IMF is a lending agency. It has a strict recovery regime and it is worst than Shakespeare’s Shylock. It seeks to be tough as any lender would because it wants to ensure that its loans are returned, with interest. Banks, and even individuals, don’t lend unless they expect and get assurances that their money will be returned, and need to know about a business plan. So does the IMF, and it is fully entitled to do so. If you don’t like their conditionality, don’t borrow from them. Don’t blame the IMF for its stringent demands. It would draw out every ounce of blood in exchange for the money given. Its loans have been mounting and its hold over both pelf and power is increasing manifold. I am forgetting Imran Khan’s exact warnings and reminders when in opposition that as to for how many decades our future generations would remain tied up to pay back loans to IMF. Indeed, IMF was no less than a four letter word for Imran Khan who used shout from top of the container that he would commit suicide rather than beg and borrow from IMF.

My friend of many moons M. Ziauddin (former Editor Dawn/News/Tribune) feels that the way IMF deal has come about amounts to virtual takeover by technocrats and capitulation to IMF dictates. In an article he discusses the apparent takeover of the government by technocrats like Hafeez Sheikh, Reza Baqir and Syed Shabbar Zaidi. The EFF agreement signed between the IMF’s technical team and the official trio managing the PTI government’s economy flies directly into the face of PTI’s election manifesto, claims Ziauddin.

When Ziauddin mentions about the induction of three technocrats -or three IMF Musketeers– Hafeez Shaikh, Adviser to the PM on finance, Reza Baqir, Governor, State Bank of Pakistan and Syed Shabbar Zaidi, Chairman Federal Board of Revenue – to manage our national economy-I am reminded of Meer Taqi Meer’s Dispenser boys who were responsible for his ailments. The analogy I am using now may look closely appropriate. In the post-IMF deal it seems to be rather hitting the nail on the head when one is reminded of the phrase for situations like Pakistan’s -‘re-arranging the deck chairs on the Titanic!’

The writer is the former High Commissioner of Pakistan to UK and a veteran journalist