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 well 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.