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Dating with Debt

For decades, the prevailing political mindset has been the root cause of the economy’s precipice—the prime reason for applying for IMF loans despite harsh conditions.

By Majyd Aziz | November 2024

It was in June 2013, and there was a flurry of activities in the meeting rooms at Hotel Serena Islamabad. People moving in and out, some huffing and some puffing, some with red eyes and some with tousled hair. At first glance, it seemed that some company was holding job interviews. As we watched this to-ing and fro-ing, I saw a very senior officer of the Finance Ministry come out of one of the rooms. When we asked him about this hustle and bustle, he revealed that staff negotiations were going on between the IMF and Ministry teams. He added that it was just like a classroom in a junior high school, and the team from Washington was treating them as school students. The outcome, of course, was that Pakistan received a $4 billion extended fund facility.

Fast forward to 2024, Pakistan had again gone through what should now be termed a “ritual,” a scenario since 1958 when the nation secured the first IMF bailout amounting to $25,000. The stakes are now high, and the conditionalities of the IMF are more drastic this 25th time. But then, what can a country do when lessons are not learned, when profligacy and extravagance are standard features in federal and provincial governments, when decision-makers consider the loan as raffle winnings, and when these financial wizards have to ensure compliance with the conditionalities, all they have to do is to keep on increasing the rates of utilities, send out income tax notices that have zero impact, set up task forces to ensure fast track privatization of SOEs and hype up the determination to reform whatever needs to be reformed. And, naturally, the mantra that it would be the last time Pakistan knocked at the hallowed portal of the IMF.

Does the man on the street really understand what the IMF is and why the euphoria is hyped up by government spokespersons and whoever is the finance minister of the day when the IMF approves the loan? Does the man on the street realize the why and what of bearing galloping inflation of items of daily use, currency depreciation, looming job loss, back-breaking increases in rates of utilities, and the media and businessmen raving about the PSX Index? Does the man on the street comprehend the mechanism of the IMF funding, and why is he confused when the government mouthpieces promote IMF loans as crucial for the nation’s progress, whereas, in his opinion and experience, the aftereffects have always been economic, social, and political instabilities?

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