Stephen Cohen
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Back to the IMF?
- Thread starter Stephen Cohen
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Stephen Cohen
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AS Pakistan’s liquid foreign currency reserves slip in the wake of a widening current account deficit, falling overseas remittances and a growing international trade imbalance, a return to yet another IMF bailout looks inevitable. The return to the Washington-based global lender by one of its most mediocre and repeated clients appeared almost certain — even before former prime minister Nawaz Sharif was disqualified by the Supreme Court.
Any hope of Pakistan’s balance of payments comfortably holding out until next year’s parliamentary elections appears increasingly unlikely. And, when there is a new loan agreement, the IMF’s well-known medicine will come with another round of belt-tightening measures, notably targeting middle- and low-income households. In return, Pakistan will receive a new supply line of IMF funds to unlock other international loans from various sources, notably multilateral agencies such as the World Bank and commercial sources.
The outcome will seemingly halt a depletion of Pakistan’s foreign currency reserves and create a sense of returning calm. However, if past trends are a guide, long-term reforms to help Pakistan graduate beyond its repeated return to the IMF are unlikely.
Welcome to yet another tragic chapter in our economy’s history.
Welcome to yet another tragic chapter in Pakistan’s haphazard economic journey, where a fresh IMF rescue package looks increasingly likely. Though the PML-N government is eager to ascribe worsening economic trends to events following the former premier’s departure, nothing could be further from the truth. Well before the Panama verdict was delivered, Pakistan’s exports were already collapsing. And the current account deficit was an increasingly alarming fact of life even when Sharif’s disqualification was impossible to predict.
Pakistan’s present-day economic ailments have much to do with failures, including policy failures, of recent years, either since or before the PML-N’s electoral victory of 2013. Together, the failure to tackle the worst energy crisis in Pakistan’s history along with the failure to undertake other key measures, including a much-needed devaluation of the rupee, have eroded Pakistan’s ability to meet the challenge.
Meanwhile, the crisis surrounding Pakistan’s agriculture sector, though not necessarily of immediate consequence to the future of foreign reserves, has added an adverse element to the economy. The government’s obsession with fanciful initiatives such as metro bus projects and high-speed roads — all with borrowed money — runs the risk of becoming the proverbial white elephant unless Pakistan’s ability to keep up with its mounting debt payments improves radically.
The discussion on Pakistan’s future relationship with the IMF will remain incomplete without considering Islamabad’s past experiences. The bailouts facilitated by the lender recognised some of the worst gaps in Pakistan’s economic framework, though it failed to oversee a raft of sorely needed and long overdue structural reforms. The very fact that Pakistan today is looking at the prospect of yet another IMF loan programme, less than a year after graduating from the last one, speaks volumes for the failure to tackle the country’s multiple weaknesses.
A major economic overhaul will not succeed in bringing Pakistan on to the path of sustainable and long-term improvement without forcing a much-needed rule of law surrounding the economy. This ultimate goal will need to be built upon a radical reform of Pakistan’s tax collection system in tandem with redefining the country’s economic philosophy. Fanciful ideas seen in recent years will have to be set aside in favour of addressing urgent human needs, whose presence has practically placed more than 70 million Pakistanis, or at least a third of the population, in abject poverty.
In approaching the IMF for another loan, elements of the last loan programme must be carefully examined. Specifically, the IMF’s decision to grant the reported 12 waivers over a three-year period of the last loan must be probed in detail.
Driven by a brand new economic philosophy, Pakistan must immediately embark on a comprehensive reform of the tax collection system, while also reorienting the country’s priorities away from fancy initiatives to areas that matter the most for the mainstream. Without such a fundamental reorientation of priorities, the danger is indeed much too obvious. As long as Pakistan’s interests are driven by the elite to serve the elite, the country’s future will be interspersed with periodic bailouts by the likes of the IMF in between short-lived eras of economic growth and recovery.
Going forward, Pakistan’s economic outlook and a tainted repute of the ruling structure are not the only elements that will be at stake. Of equal significance will be the credibility of the IMF and its economic formula to begin fixing Pakistan’s economic ills.
The writer is an Islamabad-based journalist.
farhanbokhari@gmail.com
Published in Dawn, September 5th, 2017
Any hope of Pakistan’s balance of payments comfortably holding out until next year’s parliamentary elections appears increasingly unlikely. And, when there is a new loan agreement, the IMF’s well-known medicine will come with another round of belt-tightening measures, notably targeting middle- and low-income households. In return, Pakistan will receive a new supply line of IMF funds to unlock other international loans from various sources, notably multilateral agencies such as the World Bank and commercial sources.
The outcome will seemingly halt a depletion of Pakistan’s foreign currency reserves and create a sense of returning calm. However, if past trends are a guide, long-term reforms to help Pakistan graduate beyond its repeated return to the IMF are unlikely.
Welcome to yet another tragic chapter in our economy’s history.
Welcome to yet another tragic chapter in Pakistan’s haphazard economic journey, where a fresh IMF rescue package looks increasingly likely. Though the PML-N government is eager to ascribe worsening economic trends to events following the former premier’s departure, nothing could be further from the truth. Well before the Panama verdict was delivered, Pakistan’s exports were already collapsing. And the current account deficit was an increasingly alarming fact of life even when Sharif’s disqualification was impossible to predict.
Pakistan’s present-day economic ailments have much to do with failures, including policy failures, of recent years, either since or before the PML-N’s electoral victory of 2013. Together, the failure to tackle the worst energy crisis in Pakistan’s history along with the failure to undertake other key measures, including a much-needed devaluation of the rupee, have eroded Pakistan’s ability to meet the challenge.
Meanwhile, the crisis surrounding Pakistan’s agriculture sector, though not necessarily of immediate consequence to the future of foreign reserves, has added an adverse element to the economy. The government’s obsession with fanciful initiatives such as metro bus projects and high-speed roads — all with borrowed money — runs the risk of becoming the proverbial white elephant unless Pakistan’s ability to keep up with its mounting debt payments improves radically.
The discussion on Pakistan’s future relationship with the IMF will remain incomplete without considering Islamabad’s past experiences. The bailouts facilitated by the lender recognised some of the worst gaps in Pakistan’s economic framework, though it failed to oversee a raft of sorely needed and long overdue structural reforms. The very fact that Pakistan today is looking at the prospect of yet another IMF loan programme, less than a year after graduating from the last one, speaks volumes for the failure to tackle the country’s multiple weaknesses.
A major economic overhaul will not succeed in bringing Pakistan on to the path of sustainable and long-term improvement without forcing a much-needed rule of law surrounding the economy. This ultimate goal will need to be built upon a radical reform of Pakistan’s tax collection system in tandem with redefining the country’s economic philosophy. Fanciful ideas seen in recent years will have to be set aside in favour of addressing urgent human needs, whose presence has practically placed more than 70 million Pakistanis, or at least a third of the population, in abject poverty.
In approaching the IMF for another loan, elements of the last loan programme must be carefully examined. Specifically, the IMF’s decision to grant the reported 12 waivers over a three-year period of the last loan must be probed in detail.
Driven by a brand new economic philosophy, Pakistan must immediately embark on a comprehensive reform of the tax collection system, while also reorienting the country’s priorities away from fancy initiatives to areas that matter the most for the mainstream. Without such a fundamental reorientation of priorities, the danger is indeed much too obvious. As long as Pakistan’s interests are driven by the elite to serve the elite, the country’s future will be interspersed with periodic bailouts by the likes of the IMF in between short-lived eras of economic growth and recovery.
Going forward, Pakistan’s economic outlook and a tainted repute of the ruling structure are not the only elements that will be at stake. Of equal significance will be the credibility of the IMF and its economic formula to begin fixing Pakistan’s economic ills.
The writer is an Islamabad-based journalist.
farhanbokhari@gmail.com
Published in Dawn, September 5th, 2017
SoulSpokesman
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Stephen bhai,
You seem to be very concerned about Pak's financial position. Why dont you donate some of your billions to help Pak treasury?
Regards
You seem to be very concerned about Pak's financial position. Why dont you donate some of your billions to help Pak treasury?
Regards
Stephen Cohen
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Sorry ; Your proposal is summarily rejected without assigning any reason
UnitedPak
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Kids, this is what a circlejerk looks like.
@Stephen Cohen you should consider containing all of your contributions to a single "negative economic indicators" thread. You clearly only have a single subject of interest with a lot of overlap and repetitiveness. I don't think new daily threads are justified.
@Stephen Cohen you should consider containing all of your contributions to a single "negative economic indicators" thread. You clearly only have a single subject of interest with a lot of overlap and repetitiveness. I don't think new daily threads are justified.
Bullshit article. Economics don't work the way some idiots online write. They are looking at Exports-Imports. Look at Gov revenues v expendiuture.
Exports dropping are only a bad sign if the country is an export oreineted econonmy, which ours is not. Oiur is a services and industrial economy; with most services being consumed inhouse.
If you import 1BN of Mobiles per year, but you make 2 Bn in revenues from taxes (which for mobile phones are collected at POS, so don't give me the nonsense about "nobody pays taxes", then banning imports won't save you $1bn it'll cost you 1Bn.
Exports dropping are only a bad sign if the country is an export oreineted econonmy, which ours is not. Oiur is a services and industrial economy; with most services being consumed inhouse.
If you import 1BN of Mobiles per year, but you make 2 Bn in revenues from taxes (which for mobile phones are collected at POS, so don't give me the nonsense about "nobody pays taxes", then banning imports won't save you $1bn it'll cost you 1Bn.
Chanakyaa
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Viny
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protest
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Industrial? What industry? You are import oriented economy, and you need dollars for payment hence the IMF loan.
SoulSpokesman
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I am posting this on behalf of the world famous professor of sociology Dr Muhammed Ali Asadi aka Masadi sb.
The US has 800 military bases in 70 countries, is it there to win wars and defeat terrorists? The trillions spent in Iraq and Afghanistan ended up in the pockets of US aerospace defense industries and military, the ones who got the contracts, Afghanistan and Iraq have little to show for it. The US methodology of war reveals that victory never was what they desired in Afghanistan, it was more about making the world safe for capital accumulation of US corporations, by transferring the economic growth of nations like Pakistan, through consumption, to the United States, when diplomatic pressure fails, the gun is a very effective persuasion tool and America has ensured that its GUN is readily available given its military footprint around the globe.
------------------
The author needs to tackle the real sources of why Pakistan goes to the IMF and it has little to do with the collection of taxes and more to do with runaway military expenditure and the structure of an economy built on consumption and militarization of services and provision of cheap exports. This arrangement is very profitable for the IMF and the West while it might bury Pakistan under loans that eat up the budget. The only way resource theft, i.e. providing near free exports to the West because of the nature of the products, can change is through industry protection, the IMF will never tolerate that. They promote value transfer from poor to rich countries through liberalization of trade, non-protection of infant industries and the provision of janitorial services (raw materials and textiles) for slave wages with which to buy Western guns and rockets together with massive interest on loans that together with the principal eventually end up in the West and never enter the country. Why will they end this profitable relationship especially when they have the US/NATO as their loan collectors in case of default?
---------------------------
The author of this article has as his job description, pushing the US point of view using creative means, which is what current-day propaganda is all about. The US helps Pakistan with loans and peanut-aid not because it wants to win in Afghanistan or requires Pakistan's assistance to do so, its war methodology reveals otherwise, it does so to translate Pakistan's economic growth into domestic US economic growth through consumption and arms sales, over $4 billion a year, not to mention the cheap goods/raw materials it gets from Pakistan, valued at $ 2 billion but the real value of which is much higher- the new resource theft involves the use of the market and not the gun.
US interests are synonymous with capitalist interests of the big corporations, they want military expenditure by the US to stimulate the economy while directly funneling money to the aerospace defense industries with which all major corporations have links and share board members, like the $2.4 trillion it has spent in Afghanistan, all of which is still in the US through contracts to US corporations and its military, Afghanistan has nothing to show for it. The US has 800 military bases in 70 countries- is it trying to win wars in all of them? The cold war system which was a farce to salvage capitalism to begin with, is retained using mythology that is even more outrageous than was US- Soviet disparity after the war, but people buy it without question because of US cultural hegemony around the globe.
Trump has done one thing, revealed to all the crisis in global capitalism and the need to alter the business as usual of capitalist theft that the world can no longer sustain. The old guard, the military industrial managers of global capitalism find that hard to digest and so organize movements against Trump, they might succeed in neutralizing him but their problems won't vanish with him gone.
Regards
The US has 800 military bases in 70 countries, is it there to win wars and defeat terrorists? The trillions spent in Iraq and Afghanistan ended up in the pockets of US aerospace defense industries and military, the ones who got the contracts, Afghanistan and Iraq have little to show for it. The US methodology of war reveals that victory never was what they desired in Afghanistan, it was more about making the world safe for capital accumulation of US corporations, by transferring the economic growth of nations like Pakistan, through consumption, to the United States, when diplomatic pressure fails, the gun is a very effective persuasion tool and America has ensured that its GUN is readily available given its military footprint around the globe.
------------------
The author needs to tackle the real sources of why Pakistan goes to the IMF and it has little to do with the collection of taxes and more to do with runaway military expenditure and the structure of an economy built on consumption and militarization of services and provision of cheap exports. This arrangement is very profitable for the IMF and the West while it might bury Pakistan under loans that eat up the budget. The only way resource theft, i.e. providing near free exports to the West because of the nature of the products, can change is through industry protection, the IMF will never tolerate that. They promote value transfer from poor to rich countries through liberalization of trade, non-protection of infant industries and the provision of janitorial services (raw materials and textiles) for slave wages with which to buy Western guns and rockets together with massive interest on loans that together with the principal eventually end up in the West and never enter the country. Why will they end this profitable relationship especially when they have the US/NATO as their loan collectors in case of default?
---------------------------
The author of this article has as his job description, pushing the US point of view using creative means, which is what current-day propaganda is all about. The US helps Pakistan with loans and peanut-aid not because it wants to win in Afghanistan or requires Pakistan's assistance to do so, its war methodology reveals otherwise, it does so to translate Pakistan's economic growth into domestic US economic growth through consumption and arms sales, over $4 billion a year, not to mention the cheap goods/raw materials it gets from Pakistan, valued at $ 2 billion but the real value of which is much higher- the new resource theft involves the use of the market and not the gun.
US interests are synonymous with capitalist interests of the big corporations, they want military expenditure by the US to stimulate the economy while directly funneling money to the aerospace defense industries with which all major corporations have links and share board members, like the $2.4 trillion it has spent in Afghanistan, all of which is still in the US through contracts to US corporations and its military, Afghanistan has nothing to show for it. The US has 800 military bases in 70 countries- is it trying to win wars in all of them? The cold war system which was a farce to salvage capitalism to begin with, is retained using mythology that is even more outrageous than was US- Soviet disparity after the war, but people buy it without question because of US cultural hegemony around the globe.
Trump has done one thing, revealed to all the crisis in global capitalism and the need to alter the business as usual of capitalist theft that the world can no longer sustain. The old guard, the military industrial managers of global capitalism find that hard to digest and so organize movements against Trump, they might succeed in neutralizing him but their problems won't vanish with him gone.
Regards
Stephen Cohen
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The Real question is " Why dont Pakistani members post these news "
I only quote Pakistani and International News sites
Why this Ostrich attitude
Trango Towers
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Stephen Bhai is struggling to get a toilet in his house. Years of defecation in public his wife has now left him for the greener pastures of pakistan.
Rajaraja Chola
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I hope you feels the same when Pakistanis open the same threads about India bashing about something which they dont even understand. Kids.
Stephen Cohen
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Thanks for your concern ; I have a Nice Big house with all modern amenities
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