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Pakistan stands qualified for the debt waiving programme

Oct 09 - 15, 2000

What happened in Prague last week and earlier in Washington and elsewhere should be enough for the lords of World Bank and the International Monetary Fund (IMF) to understand the mood of the world at large, specially the developing countries, against their policies.

Violent protests against the policies of the World Bank and the International Monetary Fund in Prague for the third day running forced their annual general meeting to wind up on Wednesday, a day ahead of the scheduled closure. The IMF-World Bank officials, however, insisted that their business was done and they had not been derailed by street demonstrations. The protesters clashed with the police outside the hotel, where IMF-World Bank meetings participants were staying. About 100 activists were reportedly arrested on Wednesday raising the total number of detentions to 590. The demonstrators threw molotov cocktails and rocks at riot police, who responded with teargas and water cannons.

The demonstrations held by thousands of angry anti-globalisation activists during the two-day IMF-World Bank deliberations in Prague were reflective of the growing realization in the people of the developing nations about the monetary institutions’ oppressive lending policies. The condemnation of the Washington dominated lending agencies has become universal since the Seattle round of monetary talks, where the American people too rejected their policies due to practically impracticable and harsh conditionalities for loan disbursement. The conditionalities often leave the recipient governments in utter confusion and quandary due to the serious implications of their financial cobweb. Their prescriptions for the poor and developing nations to qualify for the financial assistance are invariably anti-people, with the obvious result of political upheavals and administrative collapse, due to public agitation over increased taxes and utilities’ cost. It is evident from the world scenario that no country, has ever been able to extricate itself from the clutches of these two monstrous bodies due to their marshy conditionalities. On the contrary the poor and needy nations are sunk into their trap deeper and deeper with the passage of time. The angry protests against the IMF and the World Bank therefore, emphasize the urgent need for reformation of their lending policies to make them suitable and sustainable for the poor nations.

The prestigious American newspaper Washington Post has, in an article on the operations of the International Monetary Fund (IMF) accused that the IMF is peddling misery and leaving devastation in its wake: Coinciding its article with the lMF-World Bank annual meetings in Prague, the paper pointed out that the United States, which exercised greatest influence on lMF lending policies, because of its larger contributory share bitterly ignores the IMF recommendations. The article by Robert L Borsage, co-director of the Campaign for America’s future said that when IMF prescribes austerity, health budgets are cut, children are forced to leave school and workers are thrown out of work.

The article has exposed IMF’s ruses played with the developing nations on the pretext of financial aid and assistance. Its conditionalities of reforms and restructuring of the recipient countries’ economy, coupled with increase in utilities charges, have proven to be destructive for the developing nations. History bears testimony to the fact that no nation has ever been able to oscillate out of its clutches, once it is caught in its cobweb. The IMF has emerged as an instrument of the United States’ blackmail, intimidation and coercion worldwide. It has, in fact, become a vehicle of colonial domination in the world and the Washington Post has depicted a very realistic image of the IMF. As a consequence, the United States has established itself as an economic superpower as well. Apart from several Latin American countries, which had become victim of IMF’s conditionalities at Washington’s behest, it has played havoc with the developing countries’ economies.

The rising tide of protests and agitations has brought about a change in the thinking and outlook of those who have taken upon themselves to reshape the economies of nations in line with the trend of globalization and liberalization. While the emphasis in the discourses of the delegates, comprising finance ministers and central bank heads, was on the challenges of poverty, economic stability, equity and the need to reform the reformers, the protesters asserted, through slogans and placards, that the two global leaders were suggesting wrong ways of solving poor countries problems, thereby worsening their lot. The President of the IMF, Horst Kohler, spelt out the new agenda of the two institutions, with poverty alleviation on top of it.

The British Chancellor of the Exchequer, Gordon Brown, who is the Chairman of the Monetary and Finance Committee of the IMF, disclosed at a press conference in Prague on September 23 during the course of the annual meetings of the World Bank and the IMF, that the Bretton Woods institutions were likely to accelerate steps for the implementation of debt relief programme for about 40 Heavily Indebted Poor Countries (HIPC) and that measures would shortly be announced by the lMF to proceed with the proposed relief of $50 billion for these countries. At present 10 countries are believed to have been identified by the lMF for inclusion in the debt relief programme and 10 more countries would be added to this list by the end of this year which would involve relief to the extent of $50 billion.

Pakistan also has suffered badly during the decade 1990-2000 when it remained under the surveillance and tutelage of lMF. It saw the number of poor rising from 17 to 34 per cent. Pakistan too has fallen prey to its conditionalities. It has forced strange prescriptions: raise utilities’ to burden the common man, downsize the government departments to accentuate unemployment, remove subsidies to crush the masses, resort to austerity at the cost of the limited available education, health and other social welfare facilities etc. Its conditionalities have, invariably, been impracticable, yet the recipient countries are compelled to accept them due to economic constraints. And that is the vicious circle, which never breaks for the poor and developing countries. The new millennium seems to have no message of hope for them, as the IMF’s lending and trade globalisation are the two faces of the same coin, bound to bring total economic deluge in the third world including Pakistan.

By any standard Pakistan stands qualified for the debt waiving programme. For actual framework or parameters for giving effect to the proposed programme are yet to be made public by the IMF, but, according to press reports, only those HIPCs would be eligible to receive IMF support which would strictly follow the structural reforms package to be made obligatory by the lMF for those countries in their economic and fiscal policies. What is widely understood about this programme is that debt forgiveness by the donor countries and the World Bank would be the central aim designed to relieve the HIPCs of the crushing burden of foreign debt so that these countries are able to allocate their own resources to socio-economic development efforts effectively. The present situation in these countries is that their annual inflows of foreign assistance and loans are absorbed to the extent of 90 per cent by debt servicing and loan installment payments. As a result they are left with only a trickle of foreign exchange resources which are urgently needed to spur the pace of economic development in vital sectors including social welfare projects. Their development programme is thus delayed and stalled. In order to overcome the resource gap, they are forced to approach the private banks in the international capital market for raising short-term loans. The debt burden thus keeps mounting. Consequently the economies of these countries suffer from inevitable setbacks. All these conditions prevails in Pakistan which fully justifies its claim for some relief under debt waiving programme.