The Pakistan team, headed by Federal Finance Minister Hafeez Sheikh, is going to Washington to attend meetings of the World Bank and IMF, where it will not seek an extension of the IMF programme which expires on September 30, making it the eighth of nine IMF programmes to end without completion.
The current programme ran aground because of three policy targets which the government failed to implement: limiting the fiscal deficit to 4.7 percent of the GDP, introducing a Value Added Tax and power sector reforms.
Pakistan had obtained an IMF programme of $11.3 billion in 2008, but with $3.7 billion still to be disbursed, there were slippages in the performance criteria and the programme was suspended in May 2010.
Due to last until December 2010, it was extended to the end of this September. However, the government does not view this as an opportunity to reverse all the steps it has taken purely to please the IMF, but would like to implement these steps.
Shaukat Aziz presided over the completion of an IMF programme and did not renew it. It must be remembered, however, that he did so at a time when Pakistan was much needed in the USA’s war on terror. That was another piece of evidence that the IMF is merely a subsidiary of the USA when it comes to its decision-making, and this decision-making process is much more politically motivated than economically. However, the IMF does not forgive sloppy economic performance, something of which the current government is guilty.
The consequences of handing over economic policy-making should be apparent to the present government, though its lack of an ideology leaves it open to this particular danger.
It almost seems as if the government is preparing itself for another appeal for a handout from the IMF, because even though it will not be applying for the rest of the money it was promised, it will implement the policies it hands down, because they do not place any restraint on the free-spending ways the government has come to believe is its right.
OSAMA AHMED
Karachi
