KARACHI - Pasban Democratic Party President Altaf Shakoor has said that the rulers are ready to entrap ‘Naya Pakistan’ in old snare of debt.

The rulers from the day one were ready to burden Pakistan with more foreign loans and they just befooled the nation that they had more option than to extend their begging bowl to the door of International Monetary Fund (IMF).

Shakoor expressed these views while addressing a press conference along with renowned economist Dr Shahida Wizarat at the Karachi Press Club (KPC) here on Wednesday.

Speaking to media men Dr Shahida Wizarat said that rulers were making same mistake over and over again to seek IMF loans, adding no country in the world has ever got economic freedom with the IMF recipe. Quoting Einstein she said: “The definition of insanity is doing the same thing over and over again, but expecting different results.”

She reminded that the rate of growth of Pakistan’s economy was quite impressive prior to 1990, but it declined thereafter. Borrowings from the IMF causing massive increase in debt and the conditionalities gave rise to the most serious growth crisis Pakistan has ever faced. This was reflected by a stagnating economy, de-industrialization, closing down of more than 5000 industrial units, massive unemployment, decline in real wages, increase in hunger and poverty.

Dr Wizarat said the standard IMF policy prescription for countries faced with balance of payment crisis is to devalue the currency which through reduction in export prices is expected to expand the demand for exports. By making imports more expensive the demand for imports is expected to be reduced.

This narrative does not take low elasticity of demand and supply of exports and imports into cognizance. She said with low demand and supply elasticities, the expansion in exports and the reduction in imports might not happen, as a result the trade deficit instead of declining, might actually wide.

Dr Wizarat said devaluation by increasing the price of imports unleashes inflation, which the IMF tries to curtail through monetary tightening, resulting in decline in investments, output and employment. IMF’s external sector strategy has been used unsuccessfully in Pakistan since the 1990s. While devaluation has not reduced the trade deficit, increase in interest rates to combat inflation results in recession.

Dr Wizarat proposed that as short term measures the import of luxury and consumer goods should be banned and essential consumer goods should be imported on barter. The cost borne by the wealthy classes will be marginal as compared with the tremendous socio-economic political cost entailed in the IMF strategy.

As medium to long term measures, she suggested to exploring substitutes for essential imports. She said the demand for petroleum products can be reduced by switching to alternatives sources like wind, solar, nuclear and hyderal power. Pakistan has a lot of potential for exporting agricultural products for which we have to find alternative export markets, she suggested.

Dr Wizarat had also suggested adopting gold reserve management strategy. She said after the abandonment of the gold standard, central banks hold major portion of their reserves in currencies. However, “If Pakistan wants to avert free fall in the export of food, cotton and cotton manufactures, it will have to ensure quality assurance of its products. It will have to adopt Cartagena Protocols on risk assessment and biodiversity and pass the Labeling Law so that we can categorize our exports into organic and hybrid”.

She said we have to decide whether we want to keep obliging seed companies by increasing the demand for their GM seeds, which they can’t sell in West (due to health conscious customers) at the cost of losing our export markets and ending up with a serious crisis. She suggested that all agreements signed between Pakistan, MNCs and governments need to be revisited. A foreign exchange regime in accordance with our own macroeconomic needs must be crafted to responds to the challenges instead of copying the liberal regimes and IMF dictates blindly.

However, Iqbal Hashmi, Chief Organiser Pasban Democratic Party, said that the rulers instead of relying upon the foreign consultants should take benefit from the expertise of our own experts to steer the country from prevailing economic crisis, which would be further aggravated if the rulers entangled the Naya Pakistan in old trap of IMF loans.