Business

The begging bowl

The government seems to feel entitled to IMF assistance without meeting any of the tough, but necessary, conditions.

Editorial January 30, 2011

The gentlemen of the finance ministry seem to want to have their cake and eat it too. The government seems to feel entitled to the IMF’s assistance without meeting any of the many tough, but necessary, conditions attached to it. To this end, the finance ministry is planning on enlisting the help of the US government, perhaps not realising that the Americans are just as cognisant of the need for fiscal reform in Pakistan as the IMF.

It is nothing short of embarrassing to watch the government of Pakistan beg and plead unreasonably with the Americans for money. Does nobody in the finance ministry have even the faintest desire to ensure that Pakistan can stand on its own economic feet? Must the proverbial begging bowl remain our perennial fate?

The fact remains that the IMF is being entirely reasonable in its demands of the government: increase your revenues, rationalise the tax code and end unaffordable subsidies. These measures will no doubt be unpopular. But there is also a near-consensus amongst economists that all of these policies are in our own national interest. The IMF is not some international conspiracy to strangle the Pakistani economy: it is an international institution designed to help countries become financially self-reliant.

Indeed, Pakistan has seen the benefits of the IMF’s recommendations before. The last IMF programme the government entered into, during the late-1990s and early 2000s, was a success. The Sharif and Musharraf administrations made some tough decisions that paid off: Pakistan’s skyrocketing debt was brought under control and inflation dipped into the low single digits for the first time since the 1970s. But then the profligate spending returned as President Musharraf decided to enact populist measures in a bid to win re-election, a move that failed to win him anything and badly damaged the economy in the process.

The current administration has shown promise in several areas but fiscal reform is not one of them. It has hardly taken any of the necessary decisions that are unpopular and seems to assume that American largesse will continue forever, precluding the need to raise government resources from within the country. That illusion is about to be painfully shattered and the people of Pakistan will once again suffer the consequences.

Published in The Express Tribune, January 31^st, 2011.

COMMENTS (9)

Cheebu | 13 years ago | Reply with regards to weapons.. there are two countries which give clear indication how you spend your money will give you results.. North Korea spent all its money on weapons where as South Korea spent all its money on education.. today South Korea is leading world in technology (samsung, hyundai etc) where as North Korea is struggling to even make friends and also feed its people. Its a hard reality but weapons dont feed stomachs.. but it is true that defence industries around the world need conflicts so they can continue pumping out new weapons.. with regards to Pakistan.. sincerity.. in todays world, you can very quickly change the fate of your country.. but it is sincerity which you need.. in Pakistans case, unfortunatly most citizens are not sincere with their country.. everyone waits for the opportuntity to have a go at the resources with excuses like - if i dont.. someone else will!!

Tony Singh | 13 years ago | Reply With100+nukes, why bother about economy. Can always raise the bogey "Handover the money or terrorists will have control over nukes or sell technology to North Korea" to blackmail the world.

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Waquar Quraishi | 13 years ago | Reply @ Vidyut: This denialism, to coin a term, is endemic in Pakistan. I am Indian living in UK, and get a good opportunity to interact with South Asians from a diverse educational and economic spectrum. It would be one thing if only the little educated or the not so well healed harboured the illusions you so eloquently retell. ===== But unfortunately it is not so. I was talking to a very (academically) qualified Pakistani businessman recently. The conversation turned to India's presence in Afghanistan and the aid provided to the Afghani people to help that nation get started again. His 'educated' interpretation? 'That eez jst monnay vich Bharti gornment givng to make trubble in Pak-stan.' ===== The point being that in Pakistan, inspite of the few good publications like the Tribune and Dawn or channels such as Geo and Dawn TV, the hoi-polloi are utterly indoctrinated, mis-informed and therefore confused and paranoid thoroughly. ===== It is obvious that most of the Op-Ed goes unread and undebated. Short of running comprehensive national awareness programmes, the drift will continue. Tribune and Dawn need to create National Awareness Camps on all major Pakistani campuses to make the students and youth of Pakistan aware and active of the pitfalls that the nation is about to face. 110 ill affordae nuclear weapons notwithstanding.

Sara | 13 years ago | Reply @ Vidyut Sour but true. Agreed.

harkol | 13 years ago | Reply One can never understand why the world should assist a country which is hell bent on spending more than it can afford, especially on its military. Military still dictates how much it should spend, it still continues its game of 'good extremists'. Govt. continues to be profligate and doesn't even try to rein in military. Politicians keep siphoning off what ever they can. There are dangers in Pakistan's collapse, but it can't be the responsibility of the world, while Pakistan continues its bad old ways. After all you can bring a horse to water, you can't make it drink. So, at some point of time, world powers may start thinking a 'managed collapse' is a better outcome than the status quo!

Ravi | 13 years ago | Reply @Vidyut: i second that.........

PakistaniCanadian | 13 years ago | Reply "The fact remains that the IMF is being entirely reasonable in its demands of the government: increase your revenues, rationalise the tax code and end unaffordable subsidies. These measures will no doubt be unpopular. But there is also a near-consensus amongst economists that all of these policies are in our own national interest." Yes, the IMF is indeed reasonable in asking a net importer of oil to stop subsidizing petroleum products, or to increase taxes. However, what about the opposition? Isn't it the media that gives the opposition a voice? Last I checked, back when the government tried to increase the price of gasoline, members of opposition parties were brought on every single talk show and given the opportunity to corrupt the minds of the masses. I don't quite recall any 'journalist' (of which there are very few real ones in Pakistan, unfortunately) doing any research or trying to give the masses any facts. Yet, as soon as the government reversed it's decision- one which EVERY single opposition party, and the MQM, were against, it was the media that berated the government and started to amplify the millions that would be lost through further subsidies. You talk of 'near consensus amongst economists' as if our politicians, especially those of the opposition, actually rely on experts when forming their opinions, rather than doing what they think would be popular.

Meekal Ahmed | 13 years ago | Reply An excellent Editorial -- bold and forthright.

Vidyut | 13 years ago | Reply The thing is, Pakistan has always blamed its problems outside and exploited the people. There is absolute alignment with this corrupt stand with government and military. Most Pakistanis have absolutely no clue that Pakistan has had a money problem almost all its existence. America has been giving Pakistan a lot of aid historically, but it is never there in the textbooks as a supporter or ally, because the textbooks have an important radicalizing agenda. Most Pakistanis newly entering the online world can get into absolutely ridiculous conversations and accusations out of ignorance. They genuinely think that the money problem is now and temporary and because of America. It is not an accident. If the people knew that Pakistan survives on Western aid, they would be outraged. The ministers/generals would have to DO SOMETHING to end the dependence on the hated west. It is more useful to keep the people in ignorance and continue to build their lodges (for the ministers) and nuclear arsenals (for the Army's thirst for getting even with India) that are already way larger than needed for deterrence. Today, these half lies don't let the people realize the significance of the state of the economy. I have read a Pakistani rubbish any claims of economic problems on one of those "defense" type forums, with something similar to this: We are doing perfectly well and it would be better if you look at your own economy and tell your government to stop spreading anti-Pakistan propaganda. IMF is an American puppet and this is one more way to harass us in collusion with RAW. Pakistan has always given money to countries in need. They are trying to destroy us, but they will not succeed. Needless to say, my jaw D.r.o.p.p.e.d to the floor. This guy had no clue what was happening in his country!

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