- No relief for the ordinary citizen
The approval by the Asian Development Bank of a $1 billion ‘emergency loan’ for Pakistan was made because Pakistan had agreed a programme with the IMF, and had agreed to a number of measures that were meant to make the country’s economy strong. However, that has apparently not happened, which is why the emergency loan is needed in the first place. The loan is not meant for projects, but is for balance-of-payments support. Does the loan mean that the triumphant crowing by the government about its economic successes, specifically the improvement in the balance of payments, was either incorrect or misleading? What is one to make of the claims that there is to be a turnaround by next year? Incurring debt is not something this government seems to be avoiding, with Planning Minister Asad Umar being upfront in telling a Senate committee that the Railways’ Main Line Project would be executed at the cost of $9 billion, and appeared self-congratulatory when saying that the loan would be borrowed at only two per cent. While that is low, it still represents a loan to be extracted from Railways passengers, or those booking freight on it.
The problems that the ADB loan is meant to fix, such as the impact of the IMF programme on the ordinary citizen in terms of inflation, an increased interest rate and a devalued rupee, are actually the result of the IMF programme itself. The inflation will not go away even next year, according to international financial institutions. Globally, the ADB itself has reaffirmed a 2.8 per cent GDP growth, which means that jobs will be not be generated in an economy that needs them badly. Industry has somehow to survive even though interest rates are being kept high as an IMF conditionality, and are also being hit by devaluation.
The temptation to borrow must be curbed. It is almost as if going for the IMF programme has opened the floodgates, and ended the resistance of the government, to borrowing. Elected because it had criticised its predecessors for borrowing, the present government seems to have no hesitation in increasing the debt burden on the common man, apart from the hardships it has imposed by opting to borrow from the IMF.