Continuity and change – 22 Mar 2023


There are quite a few ways to look at the recent developments in the country. One of these ways is to apply the framework of continuity and change to analyze them. On the balance, there has been lots of continuity and a little change as well.

Imran Khan, the leader of the PTI, has offered to hold dialogue with ‘anyone’ for the sake of the development, interests and democracy of Pakistan, through social media. This is for the first time since 2011, when Khan was launched in a big way on the national political scene in the country, that he has offered to hold dialogue with others without any pre-qualifications. Khan is known to have turned back on his pronouncements. It remains to be seen whether this dialogue offer materializes into something concrete by the time you are reading this article.

This recent offer to hold dialogue by Khan is a welcome change. Even if he is disqualified (there does not seem to be a chance of it happening given how leniently he is being treated) for which there are lots of solid grounds both in the Toshakhana case and the foreign prohibited funding case, he still remains a national popular leader. It is true that Khan was launched by internal and external power circles to eliminate the two established political parties. Some go as far as stating that his rank was raised to bring divisiveness and anarchy in the country and there is lots of recent history to prove this assertion as well.

There is an urgent need for a new politico-economic charter between all political parties and other stakeholders in the state and society of Pakistan. The Charter of Democracy signed in 2006 worked reasonably well. However, with the introduction of the PTI as a new political force, there is a need for a new charter. It is hoped Khan does not keep the scope of his negotiations with the government limited to elections. There is a need for a broad-based political and economic charter by which all stakeholders need to abide by for the next 10 or 20 years. This is why this offer by Khan to hold dialogue, if not reversed, is such an important new development.

In terms of continuity, the rule-of-law institutions in Pakistan have continued to treat Imran Khan extremely leniently as they did in the past. That is tantamount to travesty of justice. There are two systems of rule of law: one tailored-made for influentials like Khan where ridiculously favourable behaviour is adopted towards him; second for the teeming millions of the poor and helpless who face the brunt of the law and state on a daily basis and get dis-empowered by it. It is about time this preferential mould in Imran’s favour is broken and there is at least some sense that he is not being favoured by institutions in Pakistan.

In terms of another continuity, we are currently in the 23rd IMF programme. There is a reasonable commentary on the completion of the latest review of the IMF and the harsh conditionalities that the Fund has imposed on the people of the country.

What amazes me about the IMF conditionalities for Pakistan is that they always want to raise the prices of fuel, hike the interest rates and devalue the currency, but why don’t they leverage their immense power to control the purse strings of Pakistan to call for reforms that will lead to long-term growth and development in the country? Some would say that the IMF’s job is only macroeconomic stabilization and not growth. However, if they hope to receive back their loans from Pakistan, they should know that increasing prices and creating inflation only hurt ordinary people, and that a call for reforms will put the country on the trajectory of sustainable progress.

IMF conditionalities retard growth in Pakistan and trap the country in a never-ending boom-and-bust cycle. And the sequencing of the reforms is such it always leads to a cut in the development expenditure of the country, which translates into retarding any progress on social development and makes the lives of millions of the underprivileged harsher due to the ever-increasing inflation and price hikes.

Since the IMF has had for decades, and still has, immense influence in Pakistan, why does it not force the Pakistani government to tax the real-estate sector, incomes coming from traders, and the agricultural sector? It only pushes the government to raise indirect taxes.

Why does the IMF not coerce the government in Pakistan to get rid of its loss-making state-owned-enterprises (SOEs)? According to a World Bank report of 2021, the total liabilities of the continuously loss-making SOEs in Pakistan have been in the range of 8–12 per cent of the country’s GDP in recent years. Doing a back of the envelope calculation, Pakistan’s total GDP is $350 billion. So SOEs have been hemorrhaging the country’s economy to the tune of $28 billion to $42billion in recent years. Why burden the marginalized and transfer resources from the poor to the rich in the form of price hikes and inflation and not force the government to do what will bring progress in the country?

Another recent World Bank report has estimated that the untapped foreign direct investment (FDI) of Pakistan is $2.8 billion annually. Why does the IMF not want the government to get a greater share of FDI for the country? Why does the IMF not set the targets for the Pakistani government to raise its exports and bring them to the level of its regional competitors?

Pakistan has been in the IMF lab for decades. All the IMF does is short-term stabilization. Raise the prices, devalue currency, hike interest rates and impose other such inflationary measures. The IMF is complicit in the billions of dollars of subsidies that the government gives to its elite every year either in terms of not taxing the real estate and the incomes of traders and agriculturalists or by letting SOEs persist to hemorrhage the economy. Pakistan has failed to increase its exports and bring in more FDI.

Well, next time, anyone analyses the elite-dominated economy of Pakistan, they should not ignore the role of the IMF in perpetuating it.

Only a homegrown economic agenda can take Pakistan out of the quagmire. And the charter of politics and economy that all political parties and all other stakeholders need to agree to must include real ‘structural’ reforms, and not let retrogressive sequencing of conditionalities be the dominant so-called ‘structural reforms’ that neither bring ‘structural’ changes nor ‘reform’ anything as the experience of decades has shown. Only we can put our house in order and we must do it now, even if we could not in the past.

The writer is an Islamabad-based social scientist. She can be reached at: fskcolumns@gmail.com

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