Agreement between Pakistan and the IMF: Has the ‘Let’s go to the IMF’ policy by each government been beneficial or detrimental to Pakistan?
Pakistan and the International Monetary Fund (IMF) have reached a staff level agreement to revive the loan program, after which the IMF will provide 1.17 billion to Pakistan. Since the government came to power to revive the loan program from the IMF in 2019. In this regard, the government’s subsidy on petroleum products under the IMF conditions, electricity, electricity. In order to raise the rates, increase the tax rates on the salaried class and industry to collect additional taxes and some other conditions were met. According to a statement issued by the International Monetary Fund (IMF), the loan will now be about 4.2 billion, up from 6 billion after approval by the executive board. 7 billion could be made. Finance Minister Muftah Ismail on his efforts to reach an agreement with the IMF He thanked the Ministers, Secretaries and Finance Division. The statement said, “Pakistan must maintain a consistent supply-side exchange rate, along with diligent monetary policy and improve the performance of government agencies. The International Monetary Fund (IMF) said in a statement that “global inflation has led to rising prices and delays in important decisions. “Pakistan’s involvement in the IMF program spans more than half a century. Pakistan’s involvement in IMF programs has drawn mixed reactions from the country’s economists and people in governments during these programs about the impact of IMF programs on Pakistan’s economy. While the programs were for Pakistan’s financial discipline, others have pointed out that these programs have increased the country’s debt burden and increased poverty.
What is the history of Pakistan’s IMF programs?
According to the details on the World Bank’s website about Pakistan’s participation in IMF programs, Pakistan has so far had 22 programs with the IMF and the first program was decided in December 1958 to provide ڈھ 25 million to Pakistan. The agreement was reached. Since then, the IMF program has continued to grow and the last and current program agreement was signed in July 2019, under which Pakistan was to receive six billion dollars, of which three billion dollars have been received and the rest Negotiations are underway with the current government’s international body for three billion dollars. According to the history of the IMF program, under the military president Ayub Khan, there were three programs from the IMF in Pakistan. Pakistan People’s Party Prime Minister Zulfiqar Ali Bhutto During the first government headed by Pakistan, there were four IMF programs. During the tenure of Army President General Zia-ul-Haq, Pakistan participated in two IMF programs. Benazir Bhutto’s ministry in the second PPP government. During his tenure, Pakistan joined two IMF programs In Vaz Sharif’s first government, Pakistan joined an IMF program. In Benazir Bhutto’s second term as prime minister, Pakistan joined three IMF programs, while in Nawaz Sharif’s second term, Pakistan joined two. Participated in IMF programs. Under former military president Pervez Musharraf, there were two IMF programs, one in the PPP government formed from 2008 to 2013, one in the Pakistan Muslim League-Nawaz government from 2013 to 2018. During the program and the Pakistan Tehreek-e-Insaf (PTI), Pakistan joined an IMF program which was continued by the Nawaz League-led coalition government after the fall of the PTI government.
What was the role of IMF in Pakistan’s economy?
Dr. Ashfaq Hassan, an economist and former Director General of the Debt Office of the Ministry of Finance, spoke to BBC News about Pakistan’s participation in 22 IMF programs from 1958 to 2022 and its role in Pakistan’s economy. He said that the IMF has a deep connection with the Pakistani economy.
He says that after 1988, whenever any government came to power in Pakistan, the slogan was “Let’s go, let’s go to the IMF.” Factor in the IMF program. Explaining this, he said that because the IMF is under the influence of the United States, a ‘bridge’ was built from there to bring Pakistan into the IMF program and from here our governments have taken the country towards this IMF. He said that it was a fact that every outgoing government had left the economic situation so bad for the incoming government that the country had no option but to go to the IMF. Abbas Mousavi, a research fellow at the Institute of Development Economics and an economist, told BBC News that the IMF program in Pakistan since the 1980s has emphasized three things. Among them is the promotion of the concept of privatization, deregulation and free market. He said that the IMF is a US-influenced institution, so it has an economic as well as a political agenda. Appears.
Why did Pakistan need to go to the IMF again and again?
Dr Salman Shah, a former finance adviser to Pakistan and a former negotiator with the IMF, told the BBC that the IMF needed to be approached at a time when Pakistan was facing a balance of payments. He said that whenever the country’s imports increased which is still happening, the country is facing the problem of balance of payments and no one other than the IMF is responsible for this. He said that if Pakistan went to the IMF again and again, it could not be blamed on the IMF because we were facing a crisis and we had to go to them. Dr. Salman Shah said. “Under the IMF program, we can make reforms at the macro level, but not at the micro level,” he said. With that, the industrial sector had to develop more, develop agriculture and use more technology, which we did not do. Economist Dr. Alia Hashmi In this regard, he said that Pakistan’s expenditure remained high and in this regard we could not increase revenue. He said that the country had no choice but to go to the IMF.
However, according to Abbas Mousavi, Pakistan did not need to go to the IMF and should have made structural reforms. He says the IMF did not have long-term conditions for programs with Pakistan before the 1980s. However, in the name of structural reforms and financial discipline, many conditions were imposed by the IMF. Dr. Ashfaq Hassan says that if we ever had to go to Pakistan if necessary. There was no need to go to the program, but still went, as in 2013, Pakistan did not need to go to the program. At the time, the country’s external deficit was 50 2.50 billion, which could be met by other sources such as foreign investment.
Have IMF programs hurt the economy in the long run for short-term gain?
Dr. Ashfaq Hassan has termed IMF programs as harmful for Pakistan.
He says the IMF programs were designed to increase the debt burden on Pakistan and, in turn, increase poverty. Along with this, industrial development in the country has come to a standstill due to IMF programs as the IMF demands to keep the exchange rate low and raise interest rates. According to Dr. Salman Shah, the IMF program affects the common man because the IMF is against artificially controlling the currency. “When the currency depreciates, it raises inflation. Inflation is an integral part of the IMF program,” he said. According to Dr. Alia, “the IMF wants financial discipline, but these programs have caused long-term losses because the debt has increased because the loans taken have not been used in the production process.” However, he said that the entire blame could not be laid on the IMF as it was also our fault that we could not regulate the country in our economy. Dr Ashfaq Hassan said it was wrong that the IMF wanted financial discipline. “If he wants to, he should never bet on raising interest rates,” he says. A one per cent increase in interest rates increases the country’s debt by Rs 250 billion, so when the IMF talks of raising interest rates, it is detrimental to the country’s economy in the long run. Says the biggest long-term loss is that our sovereignty is lost and we are no longer independent in making economic decisions