The International Monetary Fund is in the happy position of not lending Pakistan any money, yet dictating its economic policy. It issued the statement after its teams meeting with Pakistani officials, in which it said that the emphasis was on ways of reforming the power sector (which is a way of saying that power tariff hikes were discussed), and increasing spending on health, education and infrastructure. It was not mentioned, but it would be too much to expect the IMF not to bring up the VAT. The IMF took a lenders interest, focusing a lot on Pakistans foreign currency balances, which is the way it has of assessing ability to repay. It must be remembered that though Pakistan is not on an IMF programme now, it requires a Letter of Comfort from the Fund to obtain loans from the World Bank and Asian Development Bank. It is perhaps a paradox that the IMF itself sees the security situation as a barrier to capital inflows, a situation that has been thrust on Pakistan because of its governments participation in the USAs war on terror. The IMF has also said growth is expected to reach 3.5 percent and inflation is expected to decline, but the current account may to return to a deficit, while global risk aversion is also expected to limit foreign capital inflows. While the IMF's proposals are textbook suggestions, the Finance Ministry should make its own economic policy. That the IMF continues to dictate it indicates not solely its ability to dictate, but also the intellectual bankruptcy of our policymakers. Any policy made should make sure that there is no waste of resources, and that there is attention paid to those sectors of the economy which have escaped taxation because of their over-representation in the legislatures. If proper taxation is imposed, there is no reason to keep the country in subjugation to the international financial institutions. The government must be ready to extend taxation to those sectors which use their clout to avoid it, even if that means giving up lavish lifestyles at the taxpayers expense presently enjoyed. It must also be ready to give up the alliance with the USA, and turn to tested and true allies, like China. At all costs, it must stay out of the clutches of the international financial institutions. If that means a cut in government extravagance, it would be positive, and would only benefit the government at the next elections, which are round the corner even if opposition demands are ignored.