BY M. FAZAL ELAHI,
Eventually, the incumbent coalition government of Pakistan has chosen to jump into the lap of the International Monetary Fund (IMF) for help. Knowing very well that this international financial organization of 189 countries (mandated to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world) pursues extremely stringent policies vis-à-vis lending to its members, decision of the present government to seek a financial bailout package from IMF is indeed mindboggling.
One is compelled to prod one’s mind to gauge what has led Pakistan to hastily look up to the IMF for immediate relief. Has Pakistan tried all its options in this regard? If it has, then this would mean that it has received a very cold response particularly from its close friends like Saudi Arabia and China. If it hasn’t tapped all the available options, as yet, then why this dirty haste in going to the IMF for a financial bailout package?
Going to the IMF for assistance would mean complete abidance by Pakistan of IMF’s inordinately abrasive terms and conditions. It would, therefore, be advisable for those at the helm of financial and economic management of the country, in the present government, to first tap all the available sources/options from where the financial assistance that Pakistan direly needs could be obtained.
IMF is known among its borrowing member countries as a martinet. Are they justified in thinking about their benefactor so disparagingly? No, they certainly don’t. All domestic and international loan-giving agencies, including financial institutions such as banks, extend loans to their borrowers against a very well defined, and at times harsh, set of terms and conditions. The borrowers have no option but to agree and strictly abide by the lucidly spelled out terms and conditions set forth by the respective lending agency for giving loans.
Why then all this hullaballoo about IMF’s stringent terms and conditions for extending loan to Pakistan? The IMF is not going to soften or change its terms and conditions for Pakistan, for sure. Under the circumstances, if Pakistan still chooses to go to the IMF it will have to accept its terms and conditions in toto, no matter how harsh they are. Since we are fully aware of IMF’s conditionalities vis-à-vis lending money to Pakistan, we shouldn’t strike a deal with the IMF until we have exhausted all our potential options from where the requisite financial assistance could be obtained.
While seeking a bailout package from the IMF let’s not be oblivious of the stark reality that more than the primary objective of its creation this international financial organization (IMF) is functioning under immense influence of the powers that be, particularly the United States of America (U.S.A.). The U.S., reportedly, is the largest contributor to the IMF and has 17.68 per cent of voting rights in major decisions.
The U.S. with which Pakistan’s relations is currently at its lowest ebb, in over seven decades of amity between the two countries, is hell bent on tightening the noose around Pakistan’s neck through every possible means. Reasons for this blatant antagonistic posture of the U.S. against Pakistan are umpteen. They have been talked about, over and over again, at various national and international forums. It is, therefore, needless to articulate those issues here all over again. What, however, must be brought to the fore and borne in mind are the supercilious and threatening statements of July 31 of the United States’ Secretary of State Mike Pompeo, and the most recent premeditated utterance of the spokesperson of the U.S. State Department, Heather Nauert vis-à-vis the issue of IMF assistance to Pakistan.
On Pakistan’s proclamation to go to the IMF for a bailout package, to encounter its severe economic predicaments, the U.S. Secretary of State, Mike Pompeo reacted precipitously and warned that the US would closely be watching whether the International Monetary Fund (IMF) bails out Pakistan — a key player in China’s One Belt One Road (OBOR) project, and right now in need of a bailout. Venting his views on the subject further, Mike Pompeo, without mincing his words, stated in an interview to CNBC “Make no mistake, we will be watching what the IMF does.”
More recently, spokesperson of the U.S. State Department, Heather Nauert said, in a news briefing, that the United States will examine closely Pakistan’s request for a loan from the International Monetary Fund (IMF), adding that “part of the reason that Pakistan found itself in this situation is Chinese debt”. On being asked how would the United States deal with Pakistan’s request for IMF assistance? Heather Nauert said: “In all cases, we examine that closely from all angles of it, including Pakistan’s debt position, in evaluating any type of loan program”. Ms. Nauert also blamed Pakistan’s loan arrangement with China for the country’s economic woes. She said, “I think part of the reason that Pakistan found itself in this situation is Chinese debt and the fact that there is debt that governments have incurred that they maybe thought wouldn’t be so tough to bail themselves out of, but has become increasingly tough. Pakistan and China, however, have denied this surmise of the U.S. out-and-out.
What does this intense rhetoric of key U.S. officials on the issue ultimately reveal? The underlying message that it lucidly divulges is America’s disapproval of the China-Pakistan Economic Corridor (CPEC). Right from its initiation, the U.S. stance vis-à-vis this gigantic project has been profoundly dispiriting for obvious reasons. The U.S. couldn’t have found a better opportunity to squeeze Pakistan, make it bend on its knees, and compel it come to terms with the U.S. not only on the CPEC issue but all other unsettled issues that are crucial to its interest; conspicuous among them are the Afghanistan issue and the ongoing war on terror.
In the backdrop of the scenario spelled out above, Pakistan must stand cautioned that seeking financial aid from the IMF to bail itself out from its current onerous balance of payment predicaments may create multiple excruciating problems for it. In fact, it could prove to be more detrimental than beneficial for the country in the long run.
The writer is an analyst/freelance columnist based in Islamabad, Pakistan.
BY M. FAZAL ELAHI,