Some special interest groups in Pakistan rejected the Kerry-Lugar bill as an affront to their honor and interest but corporate media activists seem to care less about the onerous conditions imposed by the IMF which translates into more misery and poverty for ordinary citizens.
In November 2008 the International Monetary Fund approved a 23-month Stand-By Arrangement for Pakistan in an amount equivalent to US$7.6 billion to support the country’s economic stabilization program. The total amount of the IMF resources made available under the arrangement equals 500 percent of the country’s quota. The arrangement was approved by the IMF Board under the Fund’s fast-track Emergency Financing Mechanism procedures.
The fiscal policies of General Musharaf’s rule (FY2007/08) had put the country at the brink of bankruptcy. The external current account deficit had widened to a record level; net capital inflows declined significantly, and currency depreciated substantially. A delay in the pass-through of higher international prices to domestic consumers led to a large increase in the fiscal deficit, and its monetization by the State Bank of Pakistan contributed to rising inflation and a sharp decline in international reserves. Pakistan was unable to secure funds from any other source so the IMF loan appeared to be a godsend.
It sounds funny but my Executive Producer was following this story so keenly that he woke me up in the middle of the night to say that the first installment had hit the country’s Central Bank.
Generally speaking there was no criticism – like a borrower with poor credit history who signs away their first born to a sub-prime mortgage, the Pakistani media blindly let it slide.
No one raised an eyebrow that the IMF required Pakistan to raise the power tariff by 24 percent during the current fiscal year in three phases – six percent in the October-December quarter, 12 percent in January-March and six percent in the April-June period. A 4.4 percent tariff increase was announced in October 2009, and now a notification is pending for an additional 13.6 percent increase.
IMF’s stated objective for this arrangement was two fold: “to restore macroeconomic stability and confidence through a tightening of macroeconomic policies; and to ensure social stability and adequate support for the poor and vulnerable in Pakistan.”
But this dual ‘objective’ is an oxymoron.
Like other developing countries, the government of Pakistan has been the leading source of employment and channel for capital. But market fundamentalists define governments as inefficient economic actors, and so prioritize reducing their economic role.
Austerity measures are imposed by raising prices of electricity and cutting other government provided subsidies so external debts (in our example IMF debt) can be paid back. Increasing electricity tariffs in Pakistan will eventually translate into layoffs and reduction of entrepreneur’s capacity to compete in global market.
Under the same IMF agreement, the State Bank of Pakistan has stopped selling foreign exchange to banks for financing crude oil imports and this results in a weakening of Pakistan rupees. Pakistan forex is also impacted by higher interest rates, another IMF condition that Pakistan had to swallow. Charging higher interest rates for credit is the classic way to control inflation and it fits well within the IMF framework.
But high interest rates are choking Pakistan’s economy: small and medium-sized businesses and farmers cannot afford credit, and so are often forced out of business. Pakistani farmers are forced to sell their land leading not only to less productive agriculture but environmental devastation.
Some would argue that higher interest rates attract foreign investment in government bonds. But at best these are short-term investments by profit-seeking investors. Pakistan’s experience under Musharaff/Quresihi tells us that short term investments have a destabilizing impact. The faster it comes, quicker it leaves.
The Kerry-Lugar Bill became an issue because it was aid to Pakistani people – directly to the civil society and it bypassed Pakistan’s army. It was made an issue by a handful of journalists and dropped like hot potatoes when GHQ told them to stop. It was aid- not a loan.
IMF’s sub-prime loan to Pakistan has conditions that impact life and livelihoods of ordinary citizens and no TV anchor, no mainstream journalist is willing to scrutinize this debt? I wonder why?
Ibrahim Sajid Malick is a Pakistani-American writer, technologist, and social entrepreneur. He has been writing on Pakistani society and politics since 1986. He has held several media, communications, and technology positions for organizations large and small. Mr. Malick graduated from New School for Social Research with a master’s degree in anthropology. He holds several technology and management certifications. He works for a leading technology firm and blogs at www.ibrahimsajidmalick.com 
these journalists that you mention like Shaheen Sehbai, Kamran Khan among others don’t care about Pakistani people. They are on ISI parole and only do what the masters want.
You hit the nail on the head. Geo, Dawn, Express and all are corporate media just out to make money. They DO NOT care about the common Pakistanis.
I 100% agreed with mustafa’s posting
they are all making money, they dont care about Pakistan.
Why doesn’t the USA help Pakistan releasing itself from the atrociously stringent conditions of the IMF? If Pakistan is relieved of these conditionalities and its debt is paid off, half of the war on extremists is won! Aid under Kerry-Lugar Act will have little impact on Pakistani society except making the NGOites mafia richer! As far as Pakistani anchro-pantheros are concerned, they are sickening! Instead of talking about them, you should have analysed the short comings of the Kerry-Lugar Act with regard to its purpose, i.e. stabilising Pakistani society!
Most of the hotshot journalists seem to be working for one agency or the other.
believe me or not every thing starts from the federal reserve in america which is a private bank. its run by a few people money is not an issue for them but they are after the real deal on world governmen.its clear as day light
European union + american union + Asian union = one world government
EU is already in place.American union[mexico,america, Canada] is in construction phase and the final stage will be asian union when the time is right the 3 unions will merge under the united nation power and there u have it on world government.
About the money & funds its only used for the enslavement of country they are like international gangster. Hiding behind the a tonz and tonz of paper work.fundz are given to few and the few are again bribed not to pay it back and the rest of the country is left to pay it.
thats why living in pakistan for a common man has be come to hard and un bearable .
@Omar: @Omar: @Omar:
USA may readily stop all sorts of aid to Pakistan. As the aids/loans are not reaching a common man for whom they are declared. Rather they are the root cause of confiscation of human rights & basic needs of life thus promoting injustice & a hurdle in implementing law & order paving way for all the dogmatism US/India want to exercise here. Its Pakistan’s political filth which is starving for the aid. Common man is neither interested nor awaiting such aid which is rather Gods wrath for him
oye Mad** C*** who has been asking for the loan in the first place. THE DO NOTHING ON YOUR OWN PAKISTANIS. Why take the loan when you can’t pay it back. There are no free lunches.
Unless you admit you are a pathetic people who have accomplished nothing in life because of your cult you will not get anywhere in life.
Agreed with Mr Raza that why u receive money when u r not capable to pay back it —-People of Pakistan are thinking to prorest against IMF by burning buses , cars breaking traffic signals—-
After burning bus we will go to IMF again to grant loan so that buses could be purchased —–ZINDA BAD OUR SOCH!? (thinking)—-this is the way of becoming a sucessful nation !?
Brilliant article……All the imf/worldbank/usa loans aids of the past were given at very strict terms which are now hurting the economy in terms of huge interest payments and also repayment of the loan itself……tis much better if we do away with imf and western loans and look to the fellow rich muslim countries for help………like oic islamic banks, uae, oman, saudi arabia etc
Great to see people realizing the horrors of such loans.