Cover Story
Fault in Our Stars?
The issue with Pakistan does not lie in its inability to progress due to outside forces but instead in its inconsistency to become an honest nation.
On September 25th, the International Monetary Fund (IMF) approved Pakistan’s 25th bailout package. This time, it was a $7 billion loan to stabilize the country’s tumultuous economic atmosphere, further regressing due to its chaotic and disorderly politics. On October 21st, reports emerged that Pakistan had requested an additional $2 billion loan for its climate fund.
In 2023, the country’s growth was 2.4 percent, lower than the population growth rate of 2.6 percent. Tax revenue fell to 12 percent while expenditure was at a high 20 percent. The country also faced severely low exports, shrinking services exports by 6.51 percent. Meanwhile, imports rose significantly. All the while, direct foreign investments continued to plunge, throwing the entire country in a heavy deficit. This doomed picture of a deteriorating economy forced Pakistan to turn to the IMF for a bailout package with strict terms and conditions to alter fiscal policies, such as implementing a high tax increase without an exemption for retail, agriculture, and export sectors. The country has also vowed to sign a new national fiscal pact to improve its spending and fiscal discipline coordination. Through these changes, Pakistan hopes to rise above the sea level, regardless of how high it is.
However, one must note the nature of the hand that is being extended, for it, too, arrives under its own conditions. The IMF loan comes under the Fund’s ‘Extended Fund Facility’ that ‘provides financial assistance to countries facing serious medium-term balance of payments problems because of structural weaknesses. Apart from being heavily monitored, unlike the loans from the Asian Development Bank (ADB) or the World Bank (WB), what is worth noting is the function of the IMF loan. It serves as a placeholder that fills the gap created by Pakistan’s insufficient fund reserves in the balance sheet rather than an actual sum of money that can be extracted and used. The loan comes with an interest rate payment that rises if the numbers further decline, and it is completely withdrawn once time’s up. In its most basic understanding, Pakistan’s government has subscribed to a 3-year ‘big loan’ subscription to balance the sheets; this ‘big loan’ will be withdrawn once the subscription expires, and we will once again force the country to reevaluate its economic condition without a plug-in. For years, it has only worsened.
The Pakistani delegation consisting of Secretary Finance Imdad Ullah Bosal and Governor State Bank of Pakistan Jameel Ahmed met the Deputy Managing Director of the IMF, Kenji Okamura, and claimed that the IMF loan will seek to resolute “fiscal consolidation, revenue expansion, energy, and SOE reforms” while there will be efforts within the country of “broadening the tax base, aligning the provincial Agriculture Income Tax regime with the federal income tax regime, rationalizing subsidies, rightsizing the government, and reducing energy sector costs.” However, an ominous truth now silently observed is that the severely militant and heavily unpredictable atmosphere of Pakistan’s political arena reeks of instability. Situated on the fault lines, surrounded by rich neighbors, the country continuously backslides, struggling with its governance whose ill fate has hindered growth.
As if in secret, the country underwent an entire judiciary fiasco on October 20th, under 24 hours and at 5 a.m. The Pakistani Parliament passed the 26th Constitutional Amendment Bill, 2024, which affirmed that the Chief Justice of Pakistan would be elected by the parliament and would have a fixed 3-year tenure, thereby shamelessly submerging the judiciary with politics and making a mockery of one of the most major institutions of a country.
Wrapped under the distaste for the judiciary holding the Election Commission accountable for hindering the previous elections and giving ‘PTI a number of non-elected seats for women and religious minorities,’ the current establishment has outdone itself in ruining the justice system. Previously, six Pakistan High Court judges were reported to ‘accuse the nation’s intelligence agency of intimidating and coercing them over “politically consequential” cases’, and before their popularity threatened to oust anyone lawfully, this motion was set in place.
Internationally too, this news has disappointed the judicial community. General Secretary Santiago Canton of the International Court of Justice (ICJ) claimed that it was an “extraordinary level of political influence over the process of judicial appointments and the judiciary’s own administration” which “erode[s] the judiciary’s capacity to independently and effectively function as a check against excesses by other branches of the State and protect human rights.”
Hence, it appears that the issue with Pakistan does not lie in its inability to progress due to outside forces but rather in its inconsistency to become an honest nation. Be it politics, economic reformation plans, or law and order, the countrymen treat the nation as an extraction site.
Time and again, the country has strayed from its path towards stability, proving that its leaders, in every core institution, lack discipline and are insincere to their nation. So, Pakistanis must ask themselves, is it the IMF that is holding us back? Are we being conspired against? Or do our countrymen fill their pockets with coins they did not work for but only collect? What can be expected as an outcome of a heavily indebted country whose resources and tax money are not allocated or utilized properly? How can the momentary monetary plug-in from the IMF, which is sure to plunge the country into debt further, foretell a story of success when it has, in its previous twenty-four times, proven to fail?
No nation can rise until its people are sincere with it. At seventy-seven, Pakistan struggles to prosper, continuously backsliding in its neighborhood because of its countrymen, not any conspirator.
The writer holds an undergraduate degree in Literary Studies from Eugene Lang College of Liberal Arts at The New School and an MPhil in South Asian Studies from the University of Cambridge. She can be reached at fathimahsheikh@gmail.com
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Oh god!!! Thank you for explaining IMF injection to me… this was so so helpful
Great read. Always a pleasure