Government officials said that they had no option but to accept the IMF’s conditions which eventually seek a cut in development projects. PHOTO: FILE
LAHORE:
For a developing country like Pakistan, the focus needs to be on growth and development in order to create a better infrastructure, which should ultimately increase economic opportunities. Unfortunately, the government’s current focus is on stabilising the economy, which could possibly lead to employment problems for university graduates.
Our economic managers are, however, bound to use this stabilisation model, as the recent loan agreement between the Pakistan government and the International Monitory Fund (IMF) was meant to take the economy out of its crisis and not for economic growth, said economists at a seminar “Alternate Economics –Building the Future of Pakistan.
Criticising the 15th loan agreement, Asad Zaman, an economist, said that the IMF lent Pakistan government money because they felt that the country was likely to default and would be unable to pay its import bill. “If we suppose, for a moment, that Pakistan defaults, then it will only hurt the 1% elite of society, while the rest will never suffer,” said Zaman.
“This is the time for self reliance, we have brilliant brains, huge resources, we only need a little support from the government. The rest can be done by Pakistanis to lessen imports. There is a huge difference between urgent and important and the government needs to understand this distinction.”
Zafar Iqbal, a chartered accountant by profession, criticised the IMF deal, saying that Pakistan was unable to negotiate and failed to convince the body over sanctioning the loan for growth purposes.
The $6.7 billion loan is not meant for growth, which will adversely impact the different segments of our economy. Government officials said that they had no option but to accept the IMF’s conditions which eventually wants Pakistan to cut down on development projects, bring agriculture sector under the tax network, remove subsidies, increase electricity, gas tariffs, devalue Pak rupee, privatisation of bleeding state own enterprises.
“Our population is growing at 3.2% per annum,” said Iqbal. “Fifty percent of our population is under 20 years of age. What would be the situation if money was not injected in different infrastructure and industrial development schemes right now?
Meanwhile, professor Waqar Haider, who heads the research and development department at the Comsats Institute of Information and Technology, said the country needed indigenous development.
“Pakistan is heavily relaying on imports and is not working on indigenous development,” said Haider. “If Pakistan is self-sufficient in its defence by producing different missiles and drones then why cannot it apply its talent in other sectors of the economy?
“Currently very few people in different industrial clusters are working with this approach. But what they create often does not meet international standards, as our scientists and engineers do not cooperate with them.”
All experts also stressed on quality education, without which the country’s society would remain ‘in a mess’.
Published in The Express Tribune, December 8th, 2013.
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COMMENTS (7)
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Go Pakistanis go......democracy is the best revenge.....at léast dictators did not bring the state of Pakistán to this state.....
Dr Asad's comments show complete disconnect between policy and academia. Any default would only hurt poor, not the 1 percent elite. These elite would simply leave the country as they have resources. Other argument about indigenous missle production is also flawed as these are not dictated by normal cost benifit analysis.
Poor negotiations? This must be the joke of the year. How can you negotiate anything when you are up the creek and drowning? If the IMF hadn't come along, Pakistan would be in default right now. Moral: Beggars have no negotiating power.
Find stability first and than focus on growth! This is like a man with no legs saying he's going to run a marathon! Businesses don't have electricity to operate. Hundreds of thousands of people are illiterate and can't contribute to the economy in any way, shape or form. If Pakistan defaults, we lose the money to fix infrastructure, We lose the money to have any kind of international trade, we cannot default! To actually talk about growth at a time like this is insane because ,given the current state of our economy, growth is impossible. Fix corruption, fix poverty and fix illiteracy and than you can start talking about growth.
This article is making my head spin. Only the 1% will suffer? How can any well educated person actually think that? The country is gasping for air as it is. If Pakistan defaults, we will be in crisis. The "experts" are insane and the ones who have pushed Pakistan into the poor state it is in. The IMF made the right call. Yes, graduates may have difficulty finding jobs but if we can get our affairs in order, we can start attracting foreign investment and raise the living standards of millions. I am really shocked at the bias of this article.
what more can we expect from a failed state... shamed citizen
What does Mr Asad Zaman mean by suggesting that only the top 1% will be hurt by a default? And what about exhaustion of reserves, capital flight, debt crisis, currency crisis, and ultimately a predictably negative growth for at least a few years? What about the government's revenues? What about spending at the public and private levels?
Mr Asad Zaman, you can never say whether the wealth of the elite would trickle down, but rest assured, any disaster at the top affects everyone.
“If we suppose, for a moment, that Pakistan defaults, then it will only hurt the 1% elite of society, while the rest will never suffer,”
How exactly did he come to this conclusion? If we default it will mean that no one will lend us any dollars and the rupee will go down like a rock. If we default banks will not open letters of credit for our exporters and importers. There will be a shortage of imported commodities chief among them petroleum products. A default will have a massive effect on the entire economy.