After just a year of adjusting from the last bailout, the imposed consequences for prescription to yet another IMF bailout has hardly come as a surprise. Pakistan, always the consistent and easily appeased client, has exposed its middle and low income strata to a further straightened standard of living under new wave of structural adjustments prescribed by the Global lender. The IMF’s renowned bailout comes with the always hard to swallow complements of tax increases and clampdowns that impact largely middle- and low-income households. As expected, the IMF on Wednesday has asked Pakistan to withdraw tax concession, impose new taxes and introduce additional electricity surcharges and containing current expenditure.
The IMF rescue package and its stipulations have become a reiterated motion in our countries economic gaffes, one that our establishment refuses to learn from.
The government’s obsession with designing the ‘World Class City’ with metro bus projects and infrastructure all through reliance on Direct Foreign Investment and the support of International Financial Institutions to implement them, adds to the mounting debt payments incurred on local and international scales. Ruling governments have historically restructured government positions and institutions to align them with neoliberal agendas. The trifecta of the International Funding Institutions; UN, IMF and World Bank and the World Trade Organization (WTO) pervades international global politics, culture, and finance and development policies and has ubiquitously instituted the paradigm of free market economy. The most important aspect of this paradigm is the freedom of capital to move across national borders and seek investment wherever it can multiply and profit seeking governments like our, in a bid to attract that investment, deregulate labor laws and economic policies which results in further impoverishment and dispossession.
The bulk of the impact of these structural adjustments in Pakistan has been largely felt by the poor because of the successive and significant increase in taxes, cost of utilities, higher fuel costs and withdrawal of food subsidies after each bailout programme. Pakistan’s political matrix has suppressed structural transformations by relying on international institutions for grants and loans that shackle the country into a neoliberal politics that profits the elite class interests while oppressing the urban poor. Not only that, the local political elite have historically further crushed union organizing under the pressure of international financial institutions (like the IMF and World Bank) to relax labor legislation and to open up the Pakistani market to foreign enterprises.
A sustainable and long-term improvement of the economy will require a drastic reformation of Pakistan’s tax collection system along with redefining the country’s economic policies. As long as Pakistan’s interests are driven by the elite to serve the elite, the will remain shackled to neo-colonial powers like IMF and their diktats.