Obama's election as president and Bush's exit from the world scene may be cause for rejoicing for many, but it does not change the grim reality in Pakistan which, like most of world's economies, is going through a financial crises. The fact is that since Pakistan's 'friends' have this time not been able to give the requested credit and assistance, Pakistan has no alternate but to negotiate a deal with IMF for financial aid. The question is therefore not whether Pakistan should seek credit from IMF but what is the last price that Pakistan should be willing to pay for such assistance? IMF is a fund which is empowered by governments like US, UK, Japan, Germany, France, Canada and Italy ("Group of 7"). G7 plus rest of EU hold over 56 percent of the voting power on IMF's executive board and hence effectively control IMF. It is said that these governments are backed by large multinationals and it is the interest of these corporations which is of paramount consideration. IMF's customers are often those countries, mainly from third world, which have mismanaged their finances over the years and cannot get credit or cash from anywhere else and as a result are left with no choice but to go to IMF with a begging bowl. In return for IMF's help, and in order to ensure that the moneys lent are recovered, a country is usually required to embark on an IMF monitored economy reform programme, also known as Structural Adjustment Policies (SAPs). Understandably SAPs are often heavily tilted in favour of economies of creditor countries and are not all necessarily beneficial to debtors. It is also a historical fact that the financial status of most of the countries who have sought IMF assistance has worsened instead of improving, but there are also success stories. It eventually all depends on how strongly a country is able to negotiate SAPs. What then are the SAPs which should worry a common Pakistani? I want to point out particularly those which should be unacceptable to government and against which it should take a strong stance and which IMF too, in today's age, should not demand. It is usual for IMF to insist on cutting of 'social spending' which means reducing expenditures on essentials like health and education. This kind of an 'austerity' is viewed with favour by lending agencies because it ensures that debts are repaid. Pakistan already spends meagre amounts on health and education and if we are required to further reduce this expenditure, it will have a devastating effect on the economy and set into motion an irreversible chain reaction. Less governmental spending on education in the face of growing population will increase school fees and decrease standard of education in government institutions. Parents will be forced to remove their children, particularly girls from schools, and those who remain will be provided education in name only. As a result, next generations of Pakistanis would be 'uneducated' and not equipped for any kind of skilled jobs. Youngsters would fall easy prey to propaganda and get involved in terrorist activities. Similarly lack of spending on health would destroy already weak health infrastructure in Pakistan. Poor would be unable to get any quality medical aid and an unhealthy population would be an unbearable burden on the economy. To me Pakistan should face financial crisis rather than accept such policies. It is usual for IMF to impose SAPs relating to elimination of restrictions on foreign ownership of sovereign rights of the country and businesses. Such SAPs may have a very serious long-term negative impact on Pakistan and require special consideration. All countries need to ensure that its sovereign resources like agricultural land, water, minerals etc are not completely owned and controlled by foreign corporations and governments. It is in fact the duty of the government to avoid this new kind of 'colonisation' of the country. In this time of financial crises, foreign entities would find it opportune to purchase Pakistani enterprises cheaply and would particularly like to obtain ownership of resources (like agricultural land) and would insist that Pakistan agree to implement a policy of no restriction on foreign ownership. It is therefore of fundamental importance that the government does not sell off its sovereign rights for short-term safety by accepting such a SAP or else we will soon find that complete sectors of economy have shifted to foreign hands. It is also likely that IMF may want to see Pakistan agree to remove tariff restrictions. This is of course important for West because it would ensure that Pakistan complies with WTO agreements, and such an open market is also good for businesses of the large foreign corporations. However elimination of tariffs would mean that foreign goods could flood Pakistani market making it impossible for domestic producers to compete, which could result in further closure of Pakistani businesses. Government needs to negotiate a correct balance between no restrictions and protection for vital domestic industry. It is generally said that the strategy of the corporations backing IMF is to get debtor countries to produce and export cheaper raw materials. This could lead the debtor country falling into a vicious cycle where large foreign corporations are then able to produce finished products with huge profits, and at the same time these very finished goods are then sold in the markets of the debtor countries. With this aim, one of the conditions imposed by IMF in past is to encourage reforms so that the country applying for IMF assistance is more oriented towards manufacturing simple products, producing cash crops like cotton and extracting its minerals. In the context of Pakistan, SAP could prove extremely harmful in many respects. One of the obvious results could be that better land would be used for producing cash crops for export, while poorer land would be available for agriculture, which would lead not only to soil erosion but serious food crises. Pakistan could become dependent on import of food. Forests and resources like coal etc would be seriously overexploited during this time and not only would this have a disastrous environmental impact but would also deplete essential resources of the country for future generations. Low prices of commodities would, for example mean that eventually the farmer would lose more money. I would say that such SAP should be unacceptable for Pakistan and not insisted upon by IMF negotiating team. Another condition normally imposed by IMF is to require the debtor country to increase interest rates for loans and deposits which attract rich investors to deposit their excess cash in the debtor country in order to earn a higher interest income which deposits can be removed by such investors whenever required. Acceptance of such 'policies' could increase deposits in Pakistani banks. However the long-term economic effect of such an increase in interest rates would be negative because Pakistani industry, small businesses and agricultural community would be unable to afford borrowings. State Bank of Pakistan and Ministry of Finance must ensure that any further increase in interest rates remains within reasonable levels. It is IMF's insistence on some of their typical SAPs that has tarnished its image for many. According to the Global Economy Review: "IMF conditions...forced southern countries to promote sweat shops, export to richer countries....a look on the most common SAP conditions show how economic advise is used to maintain the interests of the wealthy at the expense of continued suffering of the bulk of the people." Experts also say that the conditions imposed by IMF are usually accepted by the debtor governments primarily because most of people involved in the government of these countries, whether they are political, business houses or officials of central banks and the ministry of finance, are " western educated or western inclined in their thoughts." On the other hand IMF claims that IMF is not the problem. Kenneth Rogoff, Economic Councillor and Director, Research Department, IMF claims that IMF is wrongly "caricatured as a demon of austerity." He claims, "When IMF comes in, it typically applies some degree of conditionality, as would any other lender, to ensure that its loan is eventually repaid, and used for its intended purpose.....IMF usually does ask govt officials to show how they plan to put their country back on its feet....It is this planning dialogue that does more than anything else to help stabilise the economy and store viable balance of payments." Most critics of IMF agree that IMF does help governments in ensuring discipline and that is a positive side. I too am of the view that all SAPs are not bad. For example, one of the conditions usually imposed by IMF is to "shrink the government." This may be useful for a country like Pakistan considering that the government does need to be trimmed in size to make it more efficient. The problem however is that reducing the size of government will mean that a number of people would become unemployed and many families would practically be effected. This would further aggravate an already serious employment crises in the country. Slimming down of the government will therefore have to be reasonable to make it beneficial. Obtaining assistance from IMF should be beneficial also because as stated by Shaukat Tarin, once the deal is struck with IMF, it will open up the possibilities of getting support from other friendly countries as well. At the same time accepting all SAPs imposed by IMF, particularly those which I have stated above, would have a very serious impact and one would and should rather suffer now than to accept these terms and let our future generations bear the brunt. On the other hand, I am sure that IMF has learnt lessons from its experiences in other countries and should not insist upon those SAPs which are clearly against the interests of Pakistan. The problem however is that the entire negotiations with IMF are 'top secret' and shrouded in mystery. I am sure that experts within the government are fully capable but the decision which so directly affects our lives and those of our children should not be left to only few individuals. Instead IMF negotiations should be conducted not in secrecy but with full disclosure, and discussions on each one of SAPs should be held at all levels, both inside and outside the Parliament. If we are ill then we have a fundamental right not only to know what medicine is being administered, but also to judge if the treatment is acceptable. The writer is an advocate of the Supreme Court of Pakistan E-mail: mnz@nexlinx.net.pk