By Rizwan Razi
The International Monetary (IMF) has once again come hard onPakistan. A commoner at street inPakistanmay take it as yet a set of more stiff conditions. No, not at all. This time the cost is the respect of the premium office of not less than President of Islamic Republic. While showing the door to the visiting team of financial managers from Pakistan, the Funds officials refused to make any negotiation or fresh commitment regarding release of financial assistance with the visiting team, demanding a stark guarantee of President Islamic Republic of Pakistan, for implementation of the conditions mutually agreed in future through the letter of intent.
Team of Pakistani financial managers headed by its Finance Minister had approached the Fund for fresh Standby agreement for financial assistance in April this year. The decision came amid the concerns thatPakistanmay not be in a position to repay its foreign debts in the current fiscal year and existing financial performance in the company of power outages and dwindling gas supplies, without external support. The debt trapped country, which is suffering from a sever imbalances in payments, was in dire need of at least $ 4.3 billion this year to repay its debt liabilities towards the IMF.
It is worth mentioning thatPakistanhad earned a deal of standby financial assistance worth $ 11.4 billion from the IMF in year 2008. However, the program was suspended before its completion n the disbursement of only $ 7.6 billion in the backdrop of Fund’s serious reservations regarding country’s ability to implement its agreed financial reforms, which implies that the economy of the country would not able repay this debt liability.
Though there was huge uproar amongst the public at large regarding implementation of Fund’s strict conditions which considered being a root cause of mammoth rise in electricity and fuel prices, squeezing the white collar fixed income group further, yet the fund believes that Pakistan defaulted on the issues of lowering fiscal deficit and enhancing Tax to GDP ratio, which resulted in suspension of Fund’s program.
Pakistanhad to start repaying, in February this year, a $7.6 billion worth of loan which it had received from the Fund under a standby arrangement signed in 2008. It has already paid a total of $399 million in February and by the end of the current fiscal year, it has to pay a total of $1.3 billion. The repayment of whole debt liability is to be completed by the end of 2013. Moreover, a recent IMF report on Pakistan’s economy suggest that the country’s gross external financing requirements in the next fiscal would be $10.5 billion while its ability to repay loans would be weaken further.
WhilePakistanis going for fresh elections in early next year, she was left with only option to approach the same office which has already kicked her out i-e IMF. Sitting bunch of fund managers, who considered themselves as ‘chosen one’ are neither in a position nor do they have intention for trying new options to steer the country out of this financial mess which they seems to have developed following a stout hardworking.
This time humiliation is not for President of Pakistan’s personality but for that office which consider being the symbol of federation. And this humiliation has not been inflicted by cyber zealots of opposition or SMS drafter for anti Zardari guns rather a handpicked team of financial managers who have directly been seeking guidance from Presidency.
A part of Sufi school of thought believes that man is himself responsible for the hardships and humility inflicted on him/her self by Mother Nature. These are his own deeds which usually come back to him like a boomerang. So, the mortal should look into his inner self to seek salvation from existing conditions of humiliation. But this time issue is not related to one person, rather to the whole nation.
Pakistanhas had an almost continuous lending engagement with the Fund since the early 1970s, with a brief suspension in the 1980s and short exit in 2005. Since 1988,Pakistanhas had 11 programs with the IMF, spending 14 years. Success ratio of these completions has amounted to 36 per cent, with only four out of 14 programs qualifying to be dubbed as ‘successful’.
However, during whole this era, Fund was never dared to doubt or rather challenge the credibility of our financial managers, who use to negotiate with the Fund on behalf of Islamic Republic. May be we have ghosts of Dr Mehbbob ul Haq or Ghulam Ishaq Khan in corridors of our Finance Ministry and being the good and friendly ghosts they always come to rescue the financial manager team. However, now it seems that a team of financial managers groomed by Baba of bureaucracy, Ghulam Ishaq Khan, has also retired so the pigmies with no international exposure except few third ratedUSuniversities are there to rule the roost and result is obvious.
This, almost a ‘no confidence’ in the ‘financial performance’ of government by the IMF, is not maneuvered by any opposition party rather the team of financial managers itself or the team of ‘chosen one’. Financial management has always been a soft belly of the People Party right from its inception as its mentor Zulifqar Ali Bhutto, handed over the first ever finance ministry to a civil engineer, who gave the gift of nationalization and pushed the business community away from this party for all ages to come. Stagnancy in financial policies especially when the office of finance minister has become a real musical chair affair may be another factor which may be considered as a recipe for this disaster.
So if President and only the President is responsible for selecting this team of ‘prudent financial managers’, then it is obvious that where lies the responsibility of this humiliation. But if one can think in genuine and straight forward manners, and not in out of box way, even then there are still many way outs to counter the menace of rising debt liabilities on the economic horizon of country. Provided he may spare some good time during his next flight way back toUnited Stateson his back to home to see his family this time.