THIS is apropos of Dr Shahida Wazarat’s letter (March 30) in response to Sakib Sherani’s article on ‘Voodoo economics’ (Feb 24). Dr Shahida makes a number of points but I will confine myself to just a few.
I don’t think Mr Sherani said that Pakistan cannot do without the IMF. I wish we could and I am sure he does too. Yet, the facts are that successive governments have mismanaged the economy to the point where we have been forced to turn to the IMF repeatedly for ‘exceptional financing’ to stave off an economic collapse and debt default.
I am not aware which IMF programme saw the deficit soar to seven per cent of the GDP since we never implemented any of them.
The 2008 standby arrangement started out well, as it usually does. Macroeconomic imbalances were sharply reduced, inflation dropped from an eye-popping 27 per cent to single digit, the exchange rate stabilised and economic growth picked up.
Then came the floods and the farce that was the RGST. Economic policymakers relaxed, lost focus and became complacent, as they always do, once foreign exchange reserves have been rebuilt and the threat of an economic meltdown recedes.
Targets were conveniently missed, waivers for non-performance were sought and the programme drifted until it was abandoned — repeating a sequence of events that have been the hallmark of all multi-year programmes with the IMF during the previous five decades.
I don’t think Mr Sherani is a great fan of Gen Musharraf’s economic policies either. See, for example, his sarcasm and wit in an article entitled ‘Pleasant fiction’ which was printed in Dawn.
Yet, if numbers are to be believed (and that is a big ‘if’), once the economy had been stabilised, following the completion of the Poverty Reduction and Growth Facility (PRGF), there followed a period of unprecedented growth.
The fact that it was driven by a bizarre strategy based on consumption and imports (rather than investment and exports) need not detain us here. Suffice it to say that people felt prosperous and, again, if the data are to be believed, millions were lifted out of poverty.
Lastly, on ‘success stories’, Dr Shahida need not look too far. She forgets about India which took off after completing an IMF-financed arrangement, as well as Pakistan, following the completion of the PRGF, pleasant fiction notwithstanding.
DR MEEKAL AHMED
Chantilly, VA, US