IMF needs to extend a helping hand to Pakistan

Pakistan could be at a very critical juncture at this point. Forget about the stigma, International Monetary Fund (IMF) is the right agency to step in and bail-out Pakistan. Borrowing from Saudi Arabia or China was a bad idea to begin with. These countries do not have the welfare of Pakistan at heart. It is time Pakistan stop playing footsie with these two and focus on its own development. America under President Barack Obama would be far less helpful compared to President John McCain. George W Bush has been the closest friend of Pakistan since Ronald Reagan.

The Economist reports that, “Pakistan’s economy is close to freefall. Inflation is running at about 30%. The rupee has devalued by about 25% in just three months. The fiscal deficit is a whopping 10% of GDP. Foreign-exchange reserves cover just six weeks of imports.” These are dire statistics and not just Pakistan but even India should be deeply concerned. The civilian government in Pakistan must assert itself and keep the military forces confined to the barracks. This is probably the last chance for all political parties to make democracy work or else parish forever!

“Reluctantly, Pakistan has had to turn to the IMF again. Former Prime Ministers Nawaz Sharif and Benazir Bhutto, as well as Pervez Musharraf, who ruled from 1999 until this year, all had to clutch IMF lifelines when they took office. IMF support is expected to come with austere strings attached. Defence and development expenditure may be among the casualties. Neither the army nor the general public will be happy.” – The Economist. Pakistan must rethink about its existence and its survival as a viable country. The United States is unlikely to need Pakistan again as a front-line state as they do not plan to leave Afghanistan in the near future. The US and NATO forces are planning to stay in the region for a very long time, if not permanently.

The International Monetary Fund (IMF) was established on December 27, 1945, when 29 countries signed its Articles of Agreement at a conference held at Bretton Woods, New Hampshire, USA. The IMF began financial operations on March 1, 1947. The Bretton Woods Conference was held between July 1 to July 22, 1944. The key promoters of the idea were the British and the US delegations representing, respectively, liberal and conservative visions of global economic institutions. The British team was led by Maynard Keynes, who had a more Utopian view towards international financing. He wanted the IMF to lend a helping hand to member states to maintain healthy economic activity. The US delegation viewed IMF more like a bank, making sure that borrowing states could repay their debt on time. The US prevailed!