IMF program’s critics and warning

Published on – February 15, 2020 – 6:00 am
By

The subjective critique from opposition political parties on the economy stabalisation reforms of PTI government under 13th IMF loan programme, in a respond Adviser to the Prime Minister on Finance and Revenue Abdul Hafeez Shaikh on Wednesday said that Pakistan needed to learn some hard lessons from the mistakes it had made in the past in order to leapfrog ahead of other nations as a developed and sustainable economy. In his maiden speech in the Lower House, the Advisor also touched upon what went wrong and what needed to be done to take the country forward. He said that “we should learn as to how some peoples and nations are ahead of others in terms of development. If we look at them, there are some stark realities that become clear about Pakistan. These realities are not related to military or civil governments.” In his speech, Shaikh forcefully noted that the incumbent government had taken some truly historic decisions in the larger interest of the country.


The subjective critique from opposition political parties on the economy stabalisation reforms of PTI government under 13th IMF loan programme, in a respond Adviser to the Prime Minister on Finance and Revenue Abdul Hafeez Shaikh on Wednesday said that Pakistan needed to learn some hard lessons from the mistakes it had made in the past in order to leapfrog ahead of other nations as a developed and sustainable economy. In his maiden speech in the Lower House, the Advisor also touched upon what went wrong and what needed to be done to take the country forward. He said that “we should learn as to how some peoples and nations are ahead of others in terms of development. If we look at them, there are some stark realities that become clear about Pakistan. These realities are not related to military or civil governments.” In his speech, Shaikh forcefully noted that the incumbent government had taken some truly historic decisions in the larger interest of the country.

“This government took the hard decisions to decrease government expenditures and freeze the budget of the armed forces,” he noted. Despite the tough budget, Shaikh said that the incumbent government had increased the amount allocated for social safety nets from Rs100 billion to Rs192 billion. “We realized that the tough budget would be harder on some people than others, and we took measures in this regard,” he clarified. It is sad that the government is unwilling to accept that the country faces an economic crisis of unprecedented magnitude. It is more interested in blaming the opposition than in rectifying its course. The government’s blunders in its dealings with the IMF have led to a situation where, according to a former Finance Minister who is also a prominent conomist, the country’s net revenues will not be able to cover anything including debt servicing, armed forces expenses and development expenses which will have to be financed through loans. Reform the economy but in a gradual and phased manner and not in a revolutionary fashion as capacity of the masses to absorb shocks also has to be taken into consideration while making tough but necessary decisions. The Opposition parties do not critcise the government for taking recourse to IMF, as maintained by PM’a Finance Adviser Dr Abdul Hafeez Shaikh.

The opposition however points out the two blunders committed by the government. First, the government delayed taking the critical decision to go to the IMF for 10 months. By the time it decided to approach the IMF the government was in a weaker position. Second, the PTI government gave a carte blanche to the IMF. It accepted a rise in power and gas charges, brought down of the currency by 40 percent, included additional taxation in the budget and carried out 30 percent reduction in development spending. Had the government tried to persuade the IMF to drop some of the measures, or delay them till next year, the floodgates of inflation would not have opened so wide. This has led the opposition to hold that the PTI government is incompetent. But it was made clear by Kh Asif that the opposition would not be part of any conspiracy against the government and it favoured government change only through constitutional ways Instead of indulging in confrontation with the opposition, the government should realize the gravity of the situation, and take measures to improve the economy. It is encouraging that finance ministry authorities have told the visiting IMF mission that further increase in electricity tariff is not possible and fuel price adjustment for the month of November has been deferred. However, incentive package consisting of reasonably low electricity and gas tariffs and interest rate is inevitable if turnaround of economy is desired.