Trust the IMF


PENSIEVE: Trust the IMF —Farrukh Khan Pitafi

I do not intend to suggest that the IMF is the best solution we have or that it has no flaws in its policies. Yet the problem is that the country needs the kind of money for reconstruction that we can hardly ever get from any other donor

Terrible times require extreme measures but somehow Islamabad manages not to appreciate this reality. There is no harm in keeping one’s chin high and marching on in the hour of trouble. However, the gruesome realities of an unfortunate series of events should not be ignored either. Pakistan today is truly stranded between the devil and the deep blue sea. While the floods and the well-matched ineptness of the state institutions crush our spirits and lives for good measure, the terrorists comfortably stroll across the wreckage, handpicking young victims and brainwashing them with the plan to unleash them against us. But in the hour of disaster, our foremost concern should be one thing that makes our state so fragile, namely our sombre state of the economy. In the womb of this darkness, this apathy, this tragic turn of events silently incubating is a ray of light, a ray of hope. The hope is that when the flood-ravaged country is rebuilt, our economic masters may like to take a leap forward and try rebuilding the economy too with an enduring capacity.

I am glad to know that my country is already in talks with the International Monetary Fund (IMF) for an easing of the terms on the already borrowed money and perhaps asking for more. I know that whenever we talk of the IMF, our hearts are filled with scepticism if not cynicism. Even if you overlook the regular conspiracies of the Yahood-o-Nasara (Jews and Christians), the IMF’s own track record with us is such that we cannot but worry that the new arrangement will waylay our lives. But quite frankly it is time to realise that not all we face is a foreign conspiracy. Our economic priorities have always been wrong, our practices always corrupt, and our revenue collection targets always failing. Add to this the fact that most of the stringent conditions we bemoan are usually recommended in our own proposals.

I do not intend to suggest that the IMF is the best solution we have or that it has no flaws in its policies. Far from it. Yet the problem is that we are already there and the country needs the kind of money for reconstruction that we can hardly ever get from any other donor. Realising this, I have been struggling to find a good example from history in order to build a case that repudiates our half-hearted attitude towards the IMF’s recommendations. Finally, I found the example of India as elaborated by Dr Ashok Mitra in his book A Prattler’s Tale: Bengal, Marxism and Governance. Dr Mitra was the Chief Economic Advisor to Indira Gandhi’s government, Jyoti Basu’s Finance Minister in Bengal, and a perfect insider in those days.

It is a tragedy that, since February 4, 2007 when I came across the book’s review, ‘A prattler’s rattle’, written by M J Akbar, I failed to lay my hands on the book. But in the absence of the text, M J’s words are just as good and I am afraid I will have to quote extensively from them for the sake of intellectual honesty and import.

“Mitra has a startling revelation about the surprise appointment of Dr Manmohan Singh as P V Narasimha Rao’s Finance Minister in 1991. This is his narrative: Foreign exchange reserves had shrunk to a point where they could cover only a fortnight’s imports. India was ‘fast approaching bankruptcy’. The US administration, in coordination with the IMF and World Bank, sent a ‘categorical message’ to Delhi through ‘secret talks’ that began as soon as the Lok Sabha results were known: obey and save yourselves, or object and go hang. Delhi agreed to obey. But wary of similar assurances that had been belied in Latin America, Washington sought an implicit guarantee. It was decided that ‘the IMF and the World Bank would nominate the finance minister of the country after consultations with the US authorities’. It is an astonishing assertion: in the words of the author, ‘the prerogative of naming the new finance minister was also transferred to Washington’. This is followed by a second bombshell.

“The first person whose name was proposed by Washington DC, thought things over and declined the invitation to be the finance minister. Who was this person? We are not told. This is a serious gap in information, because the credibility of such a damaging revelation dwells at least partly on the name of this first offer-and-decline. We all know who the second choice was; today he is prime minister of India.”

It takes no rocket science to acknowledge that India is a growing economic power today. By this anecdote I do not intend to suggest that the IMF’s trusted Finance Minister Hafeez Sheikh be made the prime minister, although I often wish he could be. All I am trying to tell you is that not all IMF and World Bank remedies are bad. Here we have an excellent example where they actually worked. So, perhaps, we should also be seeking assistance wholeheartedly. And perhaps, if we submit fully to its regime, we can achieve that which we have wanted for so long: an all out economic recovery.

But the IMF too should try to allay such fears. Clearly the current government on its political side lacks a thorough understanding of economic matters. Where there is no capacity, the IMF with the help of Dr Hafeez Sheikh and Deputy Chairman Planning Commission Dr Nadeem ul Haque can build capacity. But this country is crying out for some relief for the poor and an economic turnaround in which success is not gauged merely through the boom in the service sector but also some revival in the industrial and agricultural sectors. In doing so, the Fund will have to understand that the people in this country are living barely above the line of basic subsistence. Any tougher regime and there will be no more hope left in the system. The new terms will have to make life easier for citizens and not more difficult. How our new economic team plans to negotiate with the IMF for lenient terms still remains to be seen. However, if Dr Sheikh manages this, he would have passed the ultimate leadership test.

The writer is an independent columnist and a talk show host. He can be reached at farukh@gmail.com

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