While the International Monetary Fund had already forecast a mere 3.2 percent GDP growth figure for the country in its previous World Economic Outlook, its latest edition downgraded this to 3.0 percent. Unlike credit agencies’ ratings, the GDP growth figure is not negotiable, being an objective quantity. However, the IMF should review its own failings rather than use this figure as a sword to wave over Pakistan’’s head when going into a review of its current EFF package, for which the review period is to begin in the current quarter. It should be noted tht the government has not just negotiated this EFF, but also the earlier StandBy Arrangement, and it was the meeting of the SB conditions which laid the basis for the current EFF.
The IMF should consider why the country’s economy, which has been under its tutelage for so many years, has been unable to achieve the sort of growth it needs. Clearly, there is something wrong with its economic prescriptions. Part of the problem lies with those prescriptions, which are not designed to grow the economy, but to make sure that Pakistan avoids the sort of loan repayment difficulties that would cause it foreign echnge difficulties. As a result, while it might be enthusiastic about the improvement in the current account, as it recorded a surplus of 1.21 billion in it in the first half of the current financial year, it will be unconcerned that the growth it predicts is anaemic, not that its earlier prediction was anywhere near the 6 to 7 percent needed to keep pace with the growing population, as well as the expectations of an impoverished citizenry.
The government has made an attempt with its recently launched Uraan Pakistan programme to get the economy moving in the right direction, and it seems to have realized that IMF prescriptions are not designed to help it overcome its debt trap, but repay its loans, and has declared that it intends the current IMF programme to be the last. The IMF may not be able to go beyond make prognostications, and gloomy ones at that. Unless the government can come up with a viable plan to jumpstart the economy, it will not be able to get rid of the IMF’s shackles. The latest prediction should show that these predictions are shackles to be used at the next negotiation. The only solution is to prevent their being another negotiation.
