Making the mare go | Pakistan Today

Making the mare go

At Penpoint

  • Asad Umar’s resignation may not be enough

The PTI government is expected to achieve what party chief Imran Khan had pledged never to do before the election last year, and which had been predicted for it as soon as it had taken office eight months ago: get an aid package from the IMF. This it has done after it had obtained relief packages from its ‘alternative’ friends, China, the UAE and Saudi Arabia. Those packages have not proved an alternative, merely a supplement. That Finance Minister Asad Umar had to resign is another matter.

It is possible that the government will argue that the IMF package would have been larger, and the conditionalities harsher, if the packages had not come through. But the fact of the matter is that the IMF having given money only after conditionalities are met, has meant that the effects of borrowing from the IMF have come before the package, so it seems that some conditionalities have already been implemented. Of course, that implementation has already caused an adverse reaction among the ordinary public.

There are two trends emerging. The first is that there is inflation speeding up, just as it seems it had been controlled. Inflation of the worst kind has not yet been seen in Pakistan, though Turkey and South America are among the more recent examples, with Europe between the wars experiencing it. The devaluations of the rupee are not enough to set off that kind of hyperinflation, but it should not be forgotten that devaluations occur when it sets in.

The second is the slowing of growth. This is particularly dangerous for a country with as large a youth bulge as Pakistan. There are not enough jobs to absorb those young people who have obtained higher qualifications. This is making nonsensical the claims of those who used to lament the unemployability of the youth because of a lack of education. Now even those who have obtained an education have not got jobs.

Because of this failure to get jobs, one of the not-so-secret drivers of the Pakistani economy is exposed: labour exports. Pakistani labour abroad is no longer unskilled. One reason is that even the Middle East, the largest absorber of such labour, will not absorb such labour. Another is that the Middle East too has experienced a period of contraction because oil prices have fallen, and its demand for labour has softened. The failure of a highly qualified young person to get a job affects numerous persons, including those who are gainfully employed. These are among the persons who opted for the PTI at the last election.

The problem has been that there has been no job creation. The PTI has not even been able to export labour, and the IMF package that is the keystone of all the packages it has negotiated, does not create any jobs. IMF packages are not meant for job creation, but solvency.

This summer may mark the end of the PTI’s mantra of the whole mess being the fault of previous governments

It might be instructive to remember that the present IMF package is meant to keep Pakistan’s balance of payments going. One reason for Pakistan’s balance of payments dilemma is the repayments of previous loans. Indeed, the last IMF package, negotiated by the previous government, was meant to ease pressure on the balance of payments caused by the need to repay previous loans. Therefore, the current package is another loan to repay previous loans.

The problem with such packages is that the original reason for making loans, development, is forgotten. These new loans merely prevent default, not allow for fresh development. Development has been made a bad word, but after all, that is why the PTI exists, so that development funds are spent wisely. So what it amounts to is the people are being asked to make immense sacrifices, without getting any benefit in return, except that of business as usual.

One of the problems the government faces is that the International Finance Institutions believe that Pakistan’s defence expenditure must be reduced. This conviction is likely to grow stronger with the recent war scare after the Pulwama attack. The world cannot afford a nuclear war, so if one side can be deprived of nuclear weapons, then the threat of war would recede.

It should be remembered that the IFIs are manned by more Indians than Pakistanis, and thus they are more likely to buy into an Indian view of the world than a Pakistani. That the USA has also adopted this worldview has been a great help, because the IFIs, it should be remembered, are basically a product of the post-World War II order, and are designed to make Third-World countries obey US wishes. The PTI’s rhetoric about national independence was obviously going to be compromised by the desire for an IMF package.

One problem the PTI faces now is that the package is coming at a time when temperatures are rising. As any policeman would confirm, this is a time when more violent crimes are committed, when the threshold for losing one’s temper goes down. It should also be kept in mind that cities are dependent on electricity grids for power to cooling devices, as well as for the water supply that itself plays an important cooling role. If those devices break down, not only are people going to grow bad-tempered, but they are going to go on the streets in search of coolness. They are not just likely to combine and protest, but they will face state authorities themselves rendered that much more hot-tempered by the heat.

The PTI government would be aware that urban populations have been erupting at the beginning of summer against loadshedding. Loadshedding may have come to an end, but electricity breakdowns have not. They may well be the fault of previous governments’ failure to upgrade the distribution system, but not only does the PTI carry the can, but that is not an argument to make to someone already on the street because of a power breakdown.

Spontaneous protests do not necessarily mean anti-government protests. However, if a mob has come into being, it is possible for opposition parties to put themselves at its head. The removal of Sudanese President Omar Al-Bashir took place because of protests over inflation.

This summer may mark the end of the PTI’s mantra of the whole mess being the fault of previous governments. That mantra is already wearing thin, but is still used because it still has takers. However, the time must come for the PTI to take responsibility for what is happening, it will have to acknowledge that it is the government!