Government should not seek more loan from IMF

  • February 23, 2009
Pakistan’s external debt and liabilities have surged to $50.85 billion during the second quarter of current fiscal year from $45.50 billion and the main contributor to this rise in foreign debt was $3.1 billion obtained from International Monetary Fund in November 2008. In coming days, the annual debt payments would further increase as a result of surge in external debt and liabilities which will put more burdens on our scant financial resources. Therefore, in these circumstances, government should not seek more loan from IMF as it would have devastating effects on the economy in the long run. This was stated by Shaban Khalid, Acting President, Islamabad Chamber of Commerce and Industry while commenting on the statement of Advisor for Finance Mr. Shaukat Tareen that a Pakistani delegation was holding talks with IMF officials in Dubai for seeking 4.5 billion dollars new loan.

Shaban Khalid said our foreign debt and liabilities have risen by $15.01 billion during last three and a half years from $35.834 billion at the end of June 2005 while additional IMF loan will further enhance our debt servicing obligations squeezing our resources for developmental projects. He said we should learn from the history as the history of IMF relationship with countries shows that IMF loaning facilities always proved harmful to people as well as to business entities. He said IMF prescriptions to borrowing countries like eliminating all subsidies on utilities and agriculture inputs, slashing government spending and raising taxes made conditions tougher for general public and businessmen. He said to pave the way for IMF loan; Pakistan’s central bank already raised its bank lending rate in early November 2008 by 2 percentage points to 15 percent which is proving the biggest hurdle in promotion of business and economic activities. He cautioned that seeking new loan from IMF would infest Pakistan’s industrial landscape with dead and sick units while there would be massive unemployment because of its devastating impact on businesses. 

ICCI Acting President said Pakistanis have bitter memories of the IMF austerity programs implemented in the late 1980s and 1990s and urged upon the government to avoid from contracting more with IMF as it will deflate the economy at a time when demand threatens to fall dramatically due to world recession. He said while other Asian countries have introduced stimulation packages to generate growth, Pakistan has done no such thing. He said our country has paid a heavy price for becoming the frontline state against terrorism and instead of seeking IMF financial support, government should convince its allied partners to provide easy and enhanced access to Pakistani products in their countries as well as make more investment in different sectors of Pakistan’s economy to compensate Pakistan for heavy economic damages suffered by fighting the war against terrorism and extremism.