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OpEdNews Op Eds    H2'ed 5/12/19

Third-World Victims of IMF Debt Trap

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The people have to pay dearly and long for the sins and crimes of their leaders - Lee Kuan Yew, former Prime Minister of Singapore.

After appointing an ex-IMF official as Finance Minister and another ex-IMF official as State Bank of Pakistan Governor, the government of Pakistan has assured the International Monetary Fund (IMF) of increasing electricity and gas prices and to eliminate the subsidy given to the consumers.

At the same time, at the IMF demand, the government would not interfere in the matters of Oil & Gas Regulatory Authority (OGRA) and National Electric Power Regulatory Authority (NEPRA) in fixing gas and electricity prices respectively. At present they have to take government permission to fix gas and electricity prices.

Dr Reza Baqir, who has been appointed as the Governor of the State Bank of Pakistan, has been with the IMF since 2000. He quit his job recently as the IMF senior resident representative to Egypt to take charge of the State Bank.

Dr. Abdul Hafeez Shaikh, the new Finance Minister, has represented in several countries as IMF official. He also worked with the World Bank, and served as country head for Saudi Arabia. Shaikh was appointed last month after the IMF apparently refused to work with Finance Minister Asad Umar.

Since coming to power, the Pakistan Tehreek-e-Insaf government has been exploring all financing options, including help from friendly countries. It has so far received a total of $9.1 billion in financial-aid packages from China, Saudi Arabia and UAE. However, it turns out that Pakistan still falling short of meeting its dollar requirement for the current financial year.

Pakistan has gone to the IMF repeatedly since the late 1980s. The last time was in 2013, when Islamabad got a $6.6-billion loan to tackle an economic crisis.

On May 12, 2019, it was announced that IMF and Pakistan have reached an agreement. Dr Shaikh announced that Pakistan would receive $6 billion worth of assistance under the IMF program over a period of three years. Besides the IMF assistance, Pakistan will also receive additional funds worth nearly $2-3 billion from institutions like the World Bank and Asian Development Bank, Dr. Shaikh added.

$ 99.1 billion IMF loan

Pakistan started the process of privatization in the 1980s, which gathered pace after the restoration of democracy in 1988. According to the finance ministry its total debt and external liabilities was $20.90 billion in 1990, rising to $38.86 billion in 2007 and $99.1 billion now.

IMF loans benefit only the corrupt leadership of Third World countries.

Former prime minister Nawaz Sharif's government obtained a whopping $35 billion in new loans during his four-year (2013-2017) tenure to repay maturing debt and keep official foreign currency reserves at a level that could give a sense of economic stability to investors.

In July 2017, the Supreme Court of Pakistan disqualified Nawaz on concealment of assets charges. In December 2018, the National Accountability Bureau (NAB), Pakistan's anti-graft court, jailed Nawaz Sharif for seven years on graft charges. The NAB in its ruling said that the three-time prime minister was unable to prove the source of income that led to his ownership of a steel mill in Saudi Arabia.

The former President, Asif Ali Zardari, whose government (2008-2013) is also responsible for huge IMF borrowing is now facing mega money-laundering cases.

Pakistan has sold out more than 160 state-run entities since the 1980s, rendering hundreds and thousands of people jobless. Instead of seeing the country free from debt, what we see today is nothing but a phenomenal surge in the external debt and liabilities that is likely to haunt Pakistan's coming generations for decades.

New IMF loan is likely to unleash a wave of liberalization, privatization and deregulation that will lead to more unemployment, poor living standards and substantial cuts in public spending.

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Author and journalist. Author of Islamic Pakistan: Illusions & Reality; Islam in the Post-Cold War Era; Islam & Modernism; Islam & Muslims in the Post-9/11 America. Currently working as free lance journalist. Executive Editor of American (more...)
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