IMF package leads Pakistan to disaster
LOW GROWTH rates, high unemployment and an ever-increasing cut in development expenditure are some of the woes ailing Pakistan as a result of toeing the IMF line. And, all of this, says Akmal Hussain, a member of the Prime Minister's Consultative Committee on Economic Policy during the Benazir era, "is the result of following a short-term policy, which is not concerned with things like the environment or social improvement." As the 1992-93 budget shows, cutbacks have been the norm in all social sectors, but in contrast the defence budget soared: the armed forces will now get 8.4 per cent more than the revised estimate.
Hussain has identified three major difficulties emerging from what he calls "bland implementation" of the IMF package. These are slowing down of growth, increasing unemployment and greater poverty, and this only exacerbates environment degradation because of the polluting activities of small-scale industries which proliferate and increase in importance in an economic slow-down.
According to Hussain, failure to invest in environmental infrastructure has resulted in the loss of top soil and adversely affected the health of the labour force. Such investment is also critical, he noted, to achieve sustainable growth, which is crucial in a nation where 87 per cent of the export basket emanates from farm products.
Hussain's severest criticism of the IMF package relates to emphasis on the benefits that would accrue from opening up the economy to global forces. Says Hussain: "In a situation where the prices of agricultural exports are declining in relation to industrial imports, what you are saying is that you should over-use your soils to increase yields and outputs to meet your foreign exchange targets. So the concentration on agricultural production is not sustainable in an environmental and resource sense".
However, rebutting this criticism, Qazi Alimullah of the finance ministry argues that if development is to be sustained, there has to be a stable economic climate and this, he contends, will not be possible unless the burgeoning budget deficit is curbed. But even the government's own figures and stray statements reveal that things have not gone as planned.
The budget deficit in the current year is more than 6 per cent of GNP, against the 4.8 per cent agreed to with the IMF. And, in an address to the Management Association of Pakistan, the chief economist of the Planning Commission, Fasihuddin, conceded that the budget deficit is running at about 8 per cent of GDP. He also acknowledged the savings level of 17 per cent to 18 per cent is short of the 20 per cent, deemed the absolute minimum for investment. At the same time, debt servicing will gobble up Pak Rs 93 billion (Indian Rs 7,750 crore), as against the revised estimate of Pak Rs 80 billion (IRs 6,667 crore) for 1990-91. This means that after deducting transfers to the provinces, the centre will be left with the princely sum of just Pak Rs 3.3 billion (IRs 2.7 crore) for all its other activities. No wonder then that the Pakistani monthly, Herald, noted dryly in a recent edition that the government's non-development expenditure is outpacing revenues.
With inflation galloping at more than 10 per cent, prices skyrocketing and corruption becoming endemic, the task of development, Hussain impressed, "becomes one of reconstructing society itself. A new approach is required, a new kind of development in which people are seen as participants -- as actual subjects -- in the development effort."