By Laila Sohail

Saturday, 29th November – 2008

The economic crisis has taken us exactly where it was expected…straight into the account books of the big bosses at the IMF We may be told that it’s a do or die situation, but there are options available. We should first get the IMF off our back, and then work on our own development programs. What Pakistan needs right now, is an out of the box solution…and some courage.

The IMF is going to bail us out with 7.6 billion dollars. The interest rate is going to be between 3.51% and 4.51%, but an official announcement is yet to be made. Apparently that’s it. We take $4bn this year, $3.6bn the next, and repay it by 2016. Or at least that’s the part we are told. According to speculations, the deal comes with an implicit price. A 30% cut in the defense budget is demanded. Other cuts may ask for reducing the number of pensionable posts in the government and semi government departments, devaluing the rupee, increasing sales tax by Rs 50billion, and imposing a 7% tax on agriculture.25% of government assets may be kept as mortgage, and the future annual budgets may now be prepared by the IMF and not the Ministry of Finance, so now it is not only at the borders where our sovereignty is compromised.

There are also concerns about the very reasons for going to the IMF. The notion being that the whole economic crisis was exaggerated so as to leave no other options open. The IMF hawks want us to go under, America wants us to go under…and now the government wants us to go under. It may be the last nail in the package to ensure that even the economy is no more independent.

It does not really matter what the intentions of the IMF are. The fact is that the Fund is not a charity institution. Regardless of its noble claims of strengthening countries, it is at the end an institution working in its own interests, and one should not be naive enough to either deny or criticize that. The loans may be meant to stir up the economy, but history has shown us the failures of this policy. One can not blame the IMF for our own ineffectiveness. Borrowing to develop, and then borrowing again to finance the previous borrowing, is a policy that can now safely be called a failure, as we have no development, but only borrowing bills to show for it. (more…)