Economic crisis, IMF conditions: government urged to hold joint parliamentary session to develop consensus

The economic experts on Monday demanded of the government to hold a joint open session of the parliament to discuss the conditionalities of the International Monetary Fund (IMF) to the borrowers along with developing a national consensus on economic crisis.
The demands were made at a seminar on "Pakistan and IMF: Issues and Options" organised by Sustainable Development Policy Institute (SDPI) here on Monday. Economic analyst Dr Pervez Tahir and Executive Director of SDPI, Dr Abid Qaiyum Suleri analysed different aspects of current economic crises and options to get rid of. The theme of the seminar aimed at cautioning further victimisation of poor and marginalised people under new IMF loan arrangements.
In addition to demanding decrease in government expenditures, they also urged the government to show economic and social maturity to overcome trust deficient between rulers and poor people of Pakistan. Dr Pervez Tahir strongly recommended an open session of joint parliament to develop a consensus on country's economic situation, as domestic economic policies were more important than to seeing international loans and aid alone.
He lamented that biggest problem of Pakistan is that we spent more than what we earn which can be only overcome through making the defence budget a realistic one, cut in other expenses including the civil administration expenditures and establishing an effective system of tax revenues.
"The joint parliament should discuss these matters, he underlined. Analysing the eight years policies of general-led authoritarian government, he deplored that their approach carried an inherent flaw as their policies essentially focused on services sector especially credit related services at the cost of agricultural and manufacturing sectors. Moreover, an excessive dependency on imports, which badly hurt our economy, he added.
Dr Tahir said that the current economic crisis in Pakistan had begun well before the ongoing global economic melt and was direct results of military government's efforts. "Fiscal deficit reached to more than 8 percent while military government had to cut in PSDP under this ambition" he observed.
Dr Abid Suleri in his detailed presentation on the history of Pakistan-IMF engagement from 1950 to 2008 called upon the government to reduce trust deficit and adopt policy of austerity, as there were more critical issues involved than to available options in seeking further loans from IMF and other bilateral and multilateral funding arrangements.
He said that leaving IMF is not an option for Pakistan, as it has to meet its obligations and conditionalities as its member as well as a borrower of this international support arrangement. "IMF is a steroid to address the balance of payment issues, and Pakistan should get loans from IMF in such situation" he added.
He lamented that Pakistan always took loans from IMF on over optimistic assumptions and unrealistic objectives involving projections in GDP growth, exports, domestic savings, and revenues which resulted in diverse side effects in fast and deep reduction in tariffs and slow intro of new revenue generation mechanism, frequent adoption of ad-hoc tax increase and expenditure cuts to meet fiscal deficit targets, reduction in PSDP leading to fall in overall investment.
He observed that poor among poorer had been bearing the brunch of all conditionalities while giving a detailed analysis of Pakistan-IMF engagement over the years involving exchange rate and payments, trade and tariffs, fiscal policies, financing and banking, and programme ownership and involvement of major stakeholders.
Citing Independent Evaluation Office Report 2002 of IMF, Dr Suleri said that political interference in the management of public enterprises flourished corruption. He noted that politics of aid was controlled by same donors and Pakistan has to accept the cross conditionalities of all if it continues to keep borrowing loans from any of them including IMF, World Bank, Friends of Pakistan, G-8, Saudi Arabia or China.