Dealing with the IMF for 25 years

OPINION

Uzair Younus

Dealing with the IMF The answer to this question, perhaps, has less to do with economic or political analysis, and more to do with human psyfor 25 years chology. Pakistan’s ruling class – and the current finance minister is as much of an insider of this ruling class as one can be – has become used to feeding off the rents provided to it not only by In a television interview a few days ago, Pakistan’s current finance minister boasted that he has been dealing with the IMF for 25 years. This claim was meant to assuage concerns and reinforce trust that he is the right man for the job. The comment, and the failure of the host to push back on the finance minister, sums the country’s citizens, but also the global community. From the early days of Ayub Khan, when the geopolitical rents related to the Cold War began flowing in, to the last spurt of rents under the China Pakistan Economic Corridor (CPEC), geopolitical rents have provided the financial resources and space to “grow” the economy. That this growth has been unsustainable, unequal, and unup all that ails Pakistan, its politics, and by extension its productive is an established fact. Over the years, the ruling class economy. has not only become comfortable but proud of the fact that they Most countries in the world do not need to go to the know “how to manage” institutions such as the IMF, World Bank, IMF on any given day. Bangladesh, a success story in the and the ADB. Of course, these institutions and their backers have Indian subcontinent over the last few years, has recently got- played along, mainly because geopolitical necessities demanded it. ten in line, as it seeks to preemptively stabilise its economy But as the world has changed, it has become increasingly difficult from a rapidly deteriorating global economic environment. in recent years to receive the kind of financial support Pakistan While quite a few countries have ended up in the IMF’s pro- needs to stabilise its economy. verbial intensive care unit over the years – even the United But the ruling elite have a mechanism to even deal with the Kingdom recently faced the IMF’s ire recently – none more downturn in geopolitical rents: Making the argument that Pakiso than the likes of Pakistan, Argentina, and Egypt. stan is too big to fail. This argument has been the last pushback This then begs the question: Why does Pakistan keep this author has received during a recent visit to Pakistan. Pressed going back to the IMF? A lot of ink has been used to explain hard on the downward trajectory of the economy and the finanthe reasons why, which fundamentally have to deal with the cial logjam the economy is in, members of the upper echelons of inability of Pakistan’s ruling class to change their habits and society fall back on the argument that the world cannot let us fail. restructure the economy. They argue that this is a country of over 230 million people with But the more important question that we must all nuclear weapons, and if there is an economic meltdown, then all think about and ponder over is this: Why is it that a particu- bets are off. lar cohort of individuals, Mr Dar included, are proud to have In short, Pakistan is holding a gun to its own head, and if learnt how to deal with the IMF and secure one bailout after the world does not help, it will have to clean up the mess once the another? gun goes off. This is the psychology of “I have been dealing with the IMF for the last twenty-five years.” And it is this psychology that has brought Pakistan to the brink. The ruling class wants to maintain The writer is Director the status quo and the bet is that the global community, with of the Pakistan Initiative all the issues it is facing today, would rather spend a few more billion maintaining the status quo, at the Atlantic Council, a because the last thing it wants is another crisis. Washington D.C.-based The tragedy of this approach is that there is literally no incentive to reform, to alter the status think tank, and host of the quo, and to create opportunity for the many, not just the few in the Islamic Republic. The median podcast Pakistonomy. He age in Pakistan is 24 years, meaning that Dar has been dealing with the IMF before the majority of tweets @uzairyounus. Pakistanis were even born. Readers can determine whether this is something to be proud of. n