M Fazal Elahi
IN an article titled “IMF assistance: more detrimental
than beneficial for Pakistan” penned by the scribe and
published in some eminent English dailies of the country, in October 2019, the incumbent government was cautioned not to get hooked on to International Monetary Fund (IMF) for assistance for its dire financial needs. The reasons quoted thereupon for not falling into the trap of the IMF were: (1) Going to the IMF for assistance would mean complete abidance of IMF’s inordinately abrasive terms and conditions by Pakistan (2) IMF is known among its borrowing member countries as a martinet; the borrowing countries have no option but to agree and strictly abide by its extremely harsh terms and conditions set forth for extending loans to them.
It was also lucidly stated in the said article that while seeking a bailout package from the IMF let us not be oblivious of the stark reality that more than the primary objective of its creation this international financial organization (IMF) is functioning under immense influence of the powers that be, particularly the United States of America. The US, reportedly, is the largest contributor to the IMF and has 17.68 per cent of voting rights in major decisions of this international lending agency. In view of the foregoing fact, the US, in particular, and the other sponsors of the IMF, in general, wouldn’t find a better opportunity to make Pakistan bend on its knees, and compel it to come to terms with them on all issues crucial to their interest.
The International Monetary Fund (IMF), as predicted, has now opened up brashly. In fact, it has unveiled its real face much earlier than one could envisage. As reported in some leading dailies of the country last week (February 14, 2020) the IMF delegation persisted on ‘immediate measures’ for reducing the revenue-expenditure gap and fixing the cash bleeding energy sector. It disagreed to grant Pakistan’s humble request to further revise the stringent revenue target (Rs. 5, 238 billion) it has set forth for Pakistan for the ongoing fiscal year. As reported by an eminent English daily of the country, official sources confirmed to them that the Federal Board of Revenue (FBR) desired a further reduction in its revised target of Rs. 5, 238 billion but the IMF preferred to see the plan aimed at removing distortions and expanding narrowed tax base on a permanent basis. The IMF, it is believed, insisted that, if the need arises, the government must take measures to correct the situation halfway instead of waiting for worsening of the situation till next fiscal year. On the issue of revenue generation the Daily under reference further reported that a couple of months ago the Fund’s Executive Board allowed FBR to reduce the target from Rs. 5.5 trillion to Rs. 5.238 trillion. If the Fund grants Pakistan’s request for further reduction in the revenue generation target question will be raised on IMF team’s credibility, a blame that the IMF certainly wouldn’t like to take on itself.
All the issues enunciated above are unambiguously crucial and challenging for the incumbent government of Pakistan. However, the most perturbing and inconceivable posture taken by the IMF is it’s blatantly asking Pakistan “to reduce its trade and commerce reliance on Beijing”, and look for other international options by signing free trade agreements with other countries too. Everyone knew this was going to come, and it has finally come. In fact, it has come much too earlier than one had expected. This issue, if looked at critically, exposes IMF’s intent to give a serious blow to the ongoing multi-billion dollar Pak-China mega CPEC project; a project that has been forecast to bring phenomenal economic boom not only to Pakistan but to the entire region. Those who keep a close eye on international politics are fully aware of the fact that particularly the USA and its steadfast cohort India have never been able to digest the very idea of this gargantuan joint venture project between Pakistan and its time-tested friend China, right from its inception.
Exchange of pleasantries and bestowing flamboyant protocols by heads of governments to each other is always reciprocal, and are very much a part of standard universal diplomatic norms. Let us, therefore, not get carried away by the pleasantries exchanged and the outwardly amazing offer the US President Donald Trump had made during his meetings with Pakistan’s premier Imran Khan. During his first meeting held at the White House in Washington on July 22, 2019 he offered to mediate on the issue of IOK between India and Pakistan, and in the second encounter held on the sidelines of the World Economic Forum (WEC) in Davos, on January 21, 2020, he renewed this offer. Yet again, while addressing a mammoth gathering at the Motera Cricket stadium in India on February 24, he reiterated his desire to mediate on the IOJK issue. Unfortunately, however, nothing tangible has come out of these offers so far. Contrary to all this, the Indian government, through a presidential decree issued on August 5, brazenly revoked Article 370 of India’s constitution that guaranteed special rights to the Muslim-majority state.
In the earlier article of the scribe, referred above, the incumbent government was also explicitly cautioned that the stance of the IMF’s vis-à-vis the issue of grant of loan to Pakistan would predictably be extremely harsh. It would be so, for two reasons: 1. Because of its stringent pecuniary policies and 2. Because of its covert ‘guided’ plan to gag Pakistan’s development projects, particularly the mega Pak-China joint venture project-CPEC. The IMF team came and left without signing the staff level agreement which, if inked, would have led to the release of the third tranche of $452 million, consented by IMF to be paid to Pakistan against the $6 billion Extended Fund Facility Program. Presumably, it happened so owing to the government’s inability to take ‘prior actions’ by placing a viable fiscal adjustment plan, hiking gas and power tariffs and ensuring Chinese loans rollover. According to media reports, Pakistan has categorically stated that it would not increase the gas and power tariffs whatever may be the consequences. What would be the ramifications of this decision vis-à-vis IMF demands wouldn’t be difficult to gauge. Whatsoever may be the end result of this mutually fractious tug-of-war between the international lending agency (IMF) and the government of Pakistan, it would be pretty easy to predict that it is going to make things worse for Pakistan in times to come.
— The writer is freelance columnist based in Islamabad.
