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Life Without IMF

July 12, 2023 at 7:21 pm | Economic Affairs

Pakistan needs for serious introspection and change in course. The sophistication of hybrid war against Pakistan calls for an equally sophisticated counter strategy.

Syed Hasan Javed

For 34 years, Pakistanis believed that their country cannot survive without the IMF programmeme. The narrative for this state of mind has been cultivated carefully by the International Financial Institutions(IFIs) Eco system in Pakistan, comprising its former employees, experts, consultants, retired bureaucrats’, scholars, businessmen, dual nationals, think tanks, etc. carefully. 

Recent debate in the Pakistani media has focused on economic meltdown. Like in the years following the May 1998 nuclear tests, the narrative of ‘debt default’ of Pakistan, has been carefully spread for years to damage Pakistan’s prospects for foreign investment and economic takeoff.

Pakistan never defaulted in the past, nor defaulted now on its debt payments in 2023. It may be recalled that the IMF had signed US$6 billion aid Programme with Pakistan in July 2019, but did not keep its promise, despite imposing brutal ‘prior actions’, all of which Pakistani authorities implemented, hoping for the release of all the installments.

These included raise of interest rates to 21 percent, devaluation from Rupees 120 in June 2018 to Rs.287in May 2023, increase in Fuel prices, hike in electricity and gas charges, etc.

These policies contributed to inflationary spiral to more than 40 percent, food inflation in particular, rampant poverty at 40 percent and additional debt of US$135billion. Enough is enough. ‘We ate the onions, and also suffered the stick’.

From all credible estimates and available data, Pakistan is falling behind in competitiveness, it is failing to attract foreign direct investment, exports are not increasing, revenue collection is falling, ranking and ratings are deteriorating, debt is rising and bad governance is increasing by leaps and bounds.

There is a need for serious introspection and change in course, while the time is still there. The sophistication of the hybrid war against Pakistan calls for an equally sophisticated counter strategy.

No doubt, Pakistan reached this level of decadence due to its decades of omissions and commissions; policy missteps; leadership crisis; bad governance; defunct elitism; political impotence; feudal tribalism; emotional activism; social and cultural disconnects; development failures; parochialism; provincialism; nepotism and cronyism.

Our development planning model based on imported fuel, liberal import policy and dependence on US$, have failed. Failures provide opportunities, too. Einstein’s theory of Insanity ‘one cannot get different results by doing the same thing over again and again’ best reflects this trauma. The Western Powers yearn for ‘Colour Revolution’ in Pakistan to benefit from the chaos and anarchy, as was seen in the Middle east, West Asia and North Africa.

The Civil service needs far reaching reforms to improve the quality of governance. The Quota system has long ago outlived not only its utility, but also its organic relevance. It has only promoted the interest of a small rural elite’s hold on the levers of state power.

Even after passage of several decades of feudal political elite rule, the rural areas have only become more impoverished with rampant poverty. The domination of narrow interests in politics has promoted emotionalism, cynicism and nihilism in population. There is blatant interference by Foreign powers and intelligence agencies in the internal affairs, with denial of economic space/market access by Western states by way of protracted sanctions, discriminatory tariffs, quotas etc.

The demographic dividend of having almost 67 percent of population below 30 years of age, enables Pakistan to groom at least a million high quality Professionals and triple of this number of Vocational Trained, Information Technology(IT)manpower annually from 2023, onwards to sustain the growth trajectory, being ignited by CPEC.

China is willing to help! For all these to materialize where Pakistan’s demography plays out to its advantage, the governance paradigm has to move away from its pro-West bias, feudal tribalism, defunct elitism, class divisions, parochialism, provincialism and nepotism.

Pakistan needs to align its policies and practices, to serve its own interests. We should not let Pakistan be ruined by the prolongation flight of capital, brain drain, youth exodus, political bankruptcy, rampant despondency, rising indebtedness, financial corruption, chronic failures and a perpetual crisis.

Pakistan has the potential to do better! The rise of Pakistan’s trusted strategic partner China as the ‘Economic Superpower’, the respect Pakistan enjoys in the Islamic world and the quality of its Military and strategic resources, make Pakistan, a category in itself.

With CPEC entering the second or the middle phase of its implementation (2020-2025), it poses very different set of challenges and requires mobilizing different kinds of professional capacities. Sensitive and strategic projects cannot and should never be headed by the dual nationals or cronies.

There is urgent need to develop the indigenous coal and renewable resources, greening of environment with massive plantations, dredging of canals, lakes and building up of water reservoirs.

It is time to undertake reforms in the civil service, local government, taxation, ease of doing business, banking and financial system, energy conservation, higher education, maritime, mining, IT, tourism sectors, agriculture reforms, development of rural credit market, rural industrialization, township village enterprises, Special economic zones(SEZs) and promotion of SMEs export culture.

Again China is willing to help! The biggest challenges include firstly, the ‘disconnect’ between Pakistani SMEs and their Chinese counterparts in the absence of mutual awareness of culture, systemic and business ethics. Secondly, the Rules and Procedures need to be aligned with the global best practices. Learning fishing is important, not just asking for more fish.  Thirdly, the slow decision making, low quality of governance, endemic corruption, red tape, need attention.

Pakistanis of all shades and opinions are now convinced that the 22nd IMF Programme, had sinister objectives as ‘tools of hybrid war’ with the political objective, to devastate |Pakistani economy and promote India’s domination in South Asia, as a counter weight to China.

The quickest and sustainable way of budgeting and living without IMF, is to gradually reverse the ‘prior actions’ of interest rate to 7 percent, revalue the rupee, reduce fuel, electricity and gas charges by half, unshackle the private sector, release its energy etc. and never let the dual nationals, head top policy institutions, nor return to IMF Programme.

All solutions emerge with ‘mindset’ change. British Economist John Maynard Keynes had observed that the ‘problem was not of generating new ideas, but remaining with the old mindset.’ China’s paramount leader Deng Xiaoping also acknowledged his greatest challenge was the ‘mindset of the people’, who were neither ready for change, nor believed it could happen! Pakistan confronts an extraordinary situation, demanding an extraordinary response strategy.

Pakistan can and should reverse its sustained downslide. It is among the best blessed and geographically well placed nations. Its rich natural resource, mineral resource, human resource, diverse climate, demography, social capital, cultural values, civil and military institutions, provide formidable ‘inbuilt strengths’.

The investment by the Chinese Small and Medium Enterprises(SMEs), by way of joint ventures can bring in 90 percent of the investment, under CPEC’s medium and long term programmes. They need to be engaged by our China trained human resource talents and entrepreneurs. CPEC is means to an end i.e. economic take off of Pakistan, which can happen with ‘Comprehensive Policy Reforms’, drawn up by national synergy of academia, industry & government.

The Writer is a Farmer Ambassador

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