[Quideuaquitarragona] [Qui-deu-a-qui] alguien puede traducir del inglés? Why Pakistan says adieu to IMF program?

[dani]

buenas,

esta noticia es muy interesante y no ha salido en la prensa. creo que 
deberíamos hacer difusión de ella... ahora entiendo porque ayer los EUA 
acusaron a Pakistán de estado terrorista ¿terrorista por no dejar que el 
FMI siga manejando tu economía, no?

si alguien puede traducirlo del inglés lo podríamos difundir mejor... 
¿alguien se anima?

dani

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Why Pakistan says adieu to IMF program?

·*Existing $11.3 billion Stand By Agreement (SBA) is 8^th program with 
IMF, going to be ended on a bitter note*

·*Having kept the IMF at arm’s length for over a year now is anything 
but good news ***

/By Syed Abdul Khaliq/

/22 September 2011/

The government of Pakistan has taken the latest decision to say ‘adieu’ 
to the International Monetary Fund (IMF) program at least for the time 
being, after the existing $11.3 billion Stand By Arrangement (SBA) 
program, is to be ended on 30 September 2011.This is the 8^th SBA 
program with the IMF to conclude on an unsuccessful note, since 1950 
when Pakistan joined the Fund. Out of these eight programs six were 
contracted with democratic governments.

Soon after coming into power the current PPP government had secured 
$11.3 billion IMF program in November 2008 and got disbursements of 
about $7.6 billion, but since May 2010 the program was suspended when 
IMF refused to release the remaining $3.7 billion due to non-compliance 
of the strict criteria, set under the Stand By Agreement. However, the 
agreement was extended for nine months until 30^th September 2011, but 
disbursements were not resumed owing continuous stand-off between IMF 
and government of Pakistan. The situation leads Pakistan to ultimately 
say good bye to the program. The Minister of Finance, Abdul Hafeez 
Sheikh, in a statement, made it clear on 17 September 2011.

The discontinuation of the program with the IMF has been some time in 
the making as Pakistan is cut off from IMF and World Bank funding since 
May 2010.But having kept the IMF at arm’s length for over a year now is 
anything but good news. However, the widespread belief is that the 
government wanted to get rid of the IMF imposed conditions, not because 
of any radical shift in its economic policy, but in the run up to the 
next general elections, scheduled to be held early 2013.

Out of the 11 main conditions imposed by the IMF, three major include; 
holding down the fiscal deficit, imposition of value added tax and 
slashing subsidies in power sector. Any government ready to succumb to 
these conditions have little chance to maintain popularity. So, free of 
those constraints, the government can now pursue pro-people steps like 
holding down electricity tariffs and suppressing the fuel prices.

The decision to abandon the existing IMF program is a welcome step, 
however, given the fact it seems for the time being and politically 
motivated decision. That means no conscious effort to disengage with IMF 
and provide durable relief to the people. Pertinent to mention is that 
the previous government had also given up the IMF program prematurely to 
just to win elections. It seems the current government is also toeing 
the same line ahead of elections. This is clear evidence that though 
governments agree to IMF conditions during their tenures, however, in 
run up to elections they can’t afford the heavy cost of the IMF 
“friendship”.

The discontinuation with IMF program will have obvious implications on 
the prospects of obtaining funding from other multilateral institutions 
such as the World Bank and Asian Development Bank. Pakistan would have 
to repay $1.2 billion to the IMF as principal and interest payments in 
two installments but the country’s foreign currency reserves might 
decline in the range of $500 million to a maximum $2 billion compared to 
the existing level of over $17.5 billion.

However, the government in the long run have no option but to continue 
power sector reforms, macroeconomic adjustment and stabilization program 
to maintain credibility to return to the IMF program with ease in case 
of any difficulty with external account. If that does happen, what will 
come next is almost inevitable: Pakistan will be forced back into the 
arms of the IMF. And the next time the IMF is likely to be more stringent.

So debt scenario of Pakistan is getting bad to worse. The public debt 
has soared by a whopping Rs.120 billion just between July 1, 2011 
to-date in the wake of depreciation of Pak currency. The country’s 
public debt has risen to 11 trillion, which includes foreign debt of 
Rs.4500 billion ($ 60 billion) and domestic debt of Rs. 6500 billion. 
The countryis paying $ 3 billion at average every year under debt 
servicing to foreign creditors. However, for FY-2010 the debt servicing 
target is much higher of $ 5. 46billion and ratio will further shoot up 
in 2014, when rescheduled loans will be back in action, amassing the 
external debt burden to $ 75 billion.

On the other hand, the international credit ranking of Pakistan is also 
fast decreasing mainly because of multiple implications of the country’s 
involvement in US-led war on terrorism. A recent study by the IMF found 
that twenty-eight of the poorest nations are now at high risk of debt 
crisis. Pakistan is ranked number 5 in “cumulative probability of 
default” (CPD) report. In the situation Pakistan’s economic ailments are 
getting complex and neo-liberal economic remedies are not going to work.

While still suffering from the economic pain inflicted by the last 
year’s super floods, Pakistan once again hit by the fresh wave of floods 
this year as well. The major reason of these floods is the overflowing 
of water from Left Bank Outfall Drainage (LBOD)- a World Bank funded 
faulty project. Over 8 million people are affected this time in the 
Province of Sindh. Lakhs are shelter less, foodless and without 
medicines. It is not less than shame and violation of Fundamental Human 
Rights that IMF and other creditors continue to push government for debt 
servicing, while millions crying for basic needs.

*IMF programs with Pakistan – loaded with political motivations*

Pakistan joined IMF in 1950.The first time government of Pakistan went 
for a loan from IMF was in 1958. It was a Stand By Agreement worth US $ 
25 million. However, the loan was cancelled soon after. It was a period 
of political upheavals in Pakistan and our first dictator, Field Marshal 
Ayub Khan was about to take over. However, in 1960s, during Ayub regime, 
IMF happily gave two packages; standby agreement in 1965, 1968, to ease 
the dear dictator. When second dictator Gen Yahya placed in, IMF 
continued showering its financial blessing over him and made four more 
SBA agreements in 70s doling away US $ 330 million.

However, with the first popularly elected democratic government of ZA 
Bhutto coming to power, IMF behavior towards democratic government 
became cooler and it almost deleted Pakistan from the favorite list on 
account ofBhutto’s socialist agenda.That was why Bhutto had to tell the 
Fund to “go to hell, we do not want your money”.

However, in 1979, with the toppling of ZA Bhutto’s democratically 
elected government at the hands of third and most cruel dictator Gen. 
Zia ul Haq, the nature and extent of IMF involvement drastically changed 
and it extended lavish package for the dear dictator. Statistics show 
that in 20 years (1958-1979) Pakistan had collective IMF packages of 
worth US $ 460 million. However, in Nov 1980, it extended a huge amount 
of US $ 1.27 Billion to Gen Zia regime through long-term Extended Fund 
Facility (EFF). The amount was three times the entire amount lent 
through 7 SBAs packages in 20 years.

It is interesting to note that after the passage of decade of eighties 
(Zia period) there was major change in the character of IMF packages for 
the late 80s and 90s, when Pakistan had successive stints of democratic 
governments of PPP and PML. Now, once again more complex and tough 
conditions were being attached to loans offered to Pakistan. The number 
of conditions attached to structural adjustment loan, for Benazir 
Government (1988-91), was increased from average 27 in 1985 to 56 in 
1989. The conditions attached to 1988 IMF package were the most severe 
in the history of IMF-Pakistan interaction.

The IMF’s strict and anti-people financial prescriptions continued 
throughout the 90s. But with thesudden entry of yet another dictator, 
Gen Musharraf in 1999, coupled with 9/11 incident in 2001, IMF ceased 
its harsh attitude once again andas usual softened its behavior towards 
Pakistan’s new dictator. The moment Musharraf regime agreed to be part 
of US-led war on terrorism, IMF indicated easing out its position on the 
concessional Poverty Reduction and Growth Facility (PRGF).It is 
pertinent to mention that prospects of PRGF package for Pakistan were 
quite dismal till a week before 9/11.

However, IMF swiftly changed its position after 9/11 and quickly agreed 
to support Gen. Musharraf by extending financial support under much 
needed PRGF.Thus it is evident from the above mentioned fact that sudden 
and positive change in IMF attitude towards Pakistan was the result of 
political understanding between Gen. Musharraf and US administration, 
and not in line with the ethics of multilateral lending.

ENDs



Abdul Khaliq Shah
Focal Person,
Campaign for Abolition
of Third World Debt (CADTM)-Pakistan
web: www.cadtm-pakistan.org <http://www.cadtm-pakistan.org/>
E.mail: cadtm.pakistan a gmail
Cell: +92 321 9402325
      : +92 307 5557268


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