I smell a rat (IMF)!

Yesterday Business Recorder published an editorial about Home Grown Economic Package (a ridiculous name for even more ridiculous program) that was unveiled by Finance Minister Naveed Qamar last week. Before I go on ranting about the package, I would want to know why did it take Business Recorded one week to write an editorial PRAISING the package. It should have been done the following day or the day afterwords. When politicians claim that half of time press is in pay of the government, the content of the editorial actually proves that.

The program has all the indications of being an IMF program. Pick up economic history and read out the recommendations of IMF to developing countries. In all such programs, 3 things stand out

  • No subsidies
  • No development expenditures
  • Privatize public sector enterprises

The Home Program package proposes nothing but the above.The Finance Minister and SBP Governor really take us for fools for believing that we can’t smell IMF when the whole package is reeking with IMF’s recommendations. Or may be they are being more royal than the King.

On a digression, with a infrastructure breaking at the edges and non-existent in some cases, poverty levels having significantly increased and some of the public sector entities sold for much less than their worth in last few years, it amazes me that goverment of peoples party with its roots in poor and rural classes of Pakistan can come up with such a scheme. If fully implemented, I can assure you that there will be no Peoples Party as we know it in few years.

And add insult to the injury,

The government decided on Friday…..to phase out the subsidy on electricity by June 2009 under a plan to stabilise the economy

The electricity bill I pay every month for less than half a day of daily electricity makes me feel that its not the government which is subsidising me rather its me who is subsidising the government.

It is also true that most of the problems now confronted by the PPP government are due to the mismanagement of the economy in the last one year or so by the Musharraf-Shaukat government when it decided not to take harsh policy decisions for reasons of political expediency. Now, the authorities at the helm have to pick up the pieces and administer high doses of bitter pills to save the situation from worsening further.

Last one year? They must be crazy. When the whole house of cards of 6-7% growth of Musharraf-Shaukat regime had been built on the foundation of increased consumer spending for imported goods (read A/Cs, cars, motorcycles) by loading up the customers with debt (credit cards, personal loans, car loans, house loans etc) the only growth was witnessed in service sector, stock market and real estate, the whole 8 years have been a case of misdirected priorities and the house had to come crashing down. No efforts or policies were made in last 8 years to encourage industries or improving export base. As such, none of it took place and hence we are in a situation where we don’t even know where to generate foreign exchange.

Doses of bitter pills: Why the the bitter pills have to be swallowed by the poor only? Cutting on development and reducing subisidies won’t improve the economy. It will only instill resentment in people and force them into looting and stealing to make their ends meet. How about banning or applying exorbitant duties on import of cars? Why not launching schemes for urban transport so that people don’t have to rely on expensive fuel guzzling cars to commute and save some foreign exchange? These and similar other proposals which reduce our import bills, encourage people to save (finally the government has decided to raise rates on national saving schemes – a very positive step) can go a long way in improving the lot of people but then IMF does not agree with such policies.

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