‘Can economy rise from the ashes?’

This is apropos a Business Recorder op-ed “Can economy rise from the ashes?” carried by the newspaper on Jan 15, 2023. The writer, Ahmed Zubair, has presented a highly informed perspective on the country’s state of economy. His article does purport to be a work of academic scholarship. He has argued, among other things, that “Pakistan has nearly exhausted normal access to IMF financing.

Any augmented or exceptional access to IMF financing will require its Board approval and will be predicated on deep structural reforms across all sectors. In such a scenario, IMF monitoring implementation will be highly intrusive, the like of which Pakistan has never experienced.”

I would like to make a point in this regard. According to the IMF, it provides financial support to countries hit by crises to create “breathing room” as they implement policies that restore economic stability and growth. In the case of Pakistan, however, most of its upfront conditionalities are aimed at strangling growth and deepening economic crisis. For example, investor confidence is nowhere in sight although the country is still in an IMF programme

Its lending has only resulted in exacerbating inflationary pressures, forcing the State Bank of Pakistan to increase policy rate to as high as 17 percent. Hamstrung by a poor SDR allocation, a flood-ravaged country of over 220 million people is finding it extremely difficult to stabilise its economy. In my view, the IMF is part of problem.

Hamid Shafqat (Karachi)

Copyright Business Recorder, 2023