The IMF imposes harsh and sometime unrealistic conditions on the developing countries when they asked for loans. These conditions badly hurt the poor population of these countries. If the countries resist to some harshest conditions then IMF refuse to pay the rest of the amount promised in the program. Sometimes it becomes impossible for the governments to punish its citizens and especially poorest one too hard.
The IMF sees these measures as necessary and pre-determined – in most cases by the borrowing countries’ having run-up unsustainable external or budget imbalances. But in fact the IMF has a long track record – dating back decades – of imposing unnecessary and often harmful conditions on borrowing countries.
Consequently, this time around Pakistan faces harsh conditions of strict financial discipline. Most of the countries joining the IMF refuse to accept such strict conditions as they want to have autonomy in decision-making pertaining to financial matters. Even a small African country like Botswana opted for independent advisers from public institutions and private foundation when it joined the IMF for structural facilities from 1961 to 1997. Sadly, our current government has found it difficult to resist the harsh and anti-people conditions of IMF.
IMF programmes create more economic and financial political instability because of their anti-poor and pro-rich nature. The problem with the IMF programme is that it is loaded with the ideology of the neo-liberal free market.
But here in Pakistan 80 percent of the population lives on $2 dollars a day, on which basis it cannot make any demand and which is why it always looks towards the state for health, education and subsidies on food, oil, gas and essential utilities of daily life. But this role of the state is being scuttled under the IMF programme. PM Imran Khan often speaks of the welfare state of Medina but such IMF programmes trim the welfare role of the state and create an economy with a strong market and weak state.
The poor working people and lower middle class in Pakistan have low income. Pakistan is low income country so majority of the population lives on the edge of poverty. A slight change in the economic situation impacted their lives badly. One or two percent increase in the inflation through millions into poverty.
It is worth mentioning here that 5-10 percent of the population has the capacity to absorb the IMF shocks and another 30 percent manages to survive by lowering their living standards and quality of life. An overwhelming majority in medium low income countries like ours have nothing to fall back on. To survive each shock they have to do away with some essential expenses.
Since their first priority is to feed their families, they allocate most of their funds for food. Whatever is left after food expenses is then spent on shelter, utilities, health, and education.
Shelter is their first priority and education the last. Around only 20 percent of the population manages to fulfill these essential needs; though they compromise on quality of food, shelter, utilities and health and education.
They have no choice over the utility bills that they have to bear on actual consumption. The miseries inflicted by the current programme are unbearable. The economy might improve after 5 years, but there would be few survivors to enjoy the fruits of progress.
Going to the IMF for stabilization of the economy has led to an increase in taxes, gas and electricity bills and inflation, which has made the lives of common people even more miserable. It is time for government to look for alternative ways and means to address the economic ills country is facing and find a proper treatment. The poor people suffer more under IMF conditions then without it.
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28 March, 2020