Pakistan has been suffering
from economic crises since its inception. There are various reasons behind the
plight of Pakistan economy mainly corrupt government and leaders, lack of
strategic financial policies, lack of education, lack of exports and large
number of imports, deregulation of financial institutions, terrorism, power
crises and many more.
To keep the balance of payments in check and to meet the financial obligations
government of Pakistan unfortunately always resort to take loans. This is where
IMF comes into play in Pakistan’s economy.
IMF (International monetary fund) was established in 1945. It aims to promote
international trade and monetary cooperation and also the stabilization of
exchange rates. Over the past ten years, the International Monetary Fund (IMF)
has emerged as a key player, which has greatly influenced the Pakistan’s
macroeconomic policies. Since the late 1980s, it has been imposing various
conditions on many governments who have been greatly crippled by debt servicing,
including Pakistan.
The purpose of the government of Pakistan to take loans from IMF was to
stabilize their deteriorating economy and exchange rates. IMF provides huge
amount of loans for such purposes, which seems very lucrative and attractive
offer at first sight for a short-term perspective. However there is no free
lunch. IMF provides loans in exchange of many demands and conditions, which are
to be fulfilled to get loans from IMF. Typical IMF conditions comprise contract
based macroeconomic policies (fiscal and monetary), inflation targeting
policies, financial deregulation and increased openness to international capital
flows, trade liberalization (including reduction of tariff and non-tariff
barriers) and privatization of public-sector enterprises.
In short they actually capitalize all the major sectors of the country and make
sure that the country will never be able to get out of their hands. For a
country like Pakistan these severe and rigid conditions are bound to make them
the permanent slave of IMF. They dictate their own terms and policies in
exchange of every loan, which is increasing the deterioration of economy and
exchange rates rather than stabilizing it.
According to desired situation, huge amount of loans from IMF should have
stabilized the Pakistan economy and balance of payment by now but the condition
of Pakistan economy and exchange rates are not even close of getting stabilized.
Here a very rational question arises that why taking huge amount loans from IMF
are not paying off?
The answer is very simple which is somehow not getting into the mind of our
government policy makers. G8 countries are controlling IMF. They have made
conditions and policies, which are according to their own economic conditions.
They are very developed advanced and educated countries. They cope up with all
the terms and conditions of IMF quite easily. However Under developed countries
like Pakistan have limited resources and lack of strategic policies. They easily
become victim of severe terms and conditions of IMF and lose everything
including their sovereignty and control over state.
The condition of Pakistan’s economy is a stark example of what happened to
underdeveloped countries that made the grave mistake of taking loans from IMF.
So what we can do to stabilize our economy without taking loans from IMF? The
answer is that we really need to stop being a slave of IMF. We need to stop
relaying on them. We need to amend our policies. What we really need is honest
and well educated people at top level who can make effective and viable
strategic policies to overcome the budget deficit without taking loans. We need
to increase our exports.
We need to be self-sufficient as loans are no more the solution of stabilizing
our economy. Loans will only put more weight on our already crushed economy.
With effective utilization of resources, honest educated loyal leaders and
effective strategic policies there is no way we cannot improve our economy and
exchange rates. Soon we will be in the list of developed countries but only if
we say GOODBYE to IMF and really start working to improve our economy in a
self-sufficient manner.