Bad economics

If Pakistan’s 60-year history with the IMF is analyzed through an economic lens, it would be found that despite its frequent borrowing from the global financial assistance institution, Pakistan has persistently failed to put its ailing economy back on track by failing to introduce structural reforms at macro as well as micro economic levels. Pakistan and the IMF are no strangers; since 1958, they have made nearly 21 agreements for loans. But, unfortunately, despite Pakistan’s excessive borrowing from the IMF, the only focus of almost every successive Pakistani government has remained to inflate the foreign reserves in order to avert the recurring balance of payment crisis. Fixing structural problems requires making unpopular decisions and so far no government has done so.Interestingly, Pakistan has a history of bad economic governance by relying heavily on excessive borrowing both from domestic as well as foreign financial institutions, which has always proved a major impediment in introducing structural economic reforms. In its post-programme monitoring report, the IMF also forecast that due to additional borrowings, Pakistan’s external debt would jump to $103.4 billion by June 2019. Therefore, it would be wise on the part of the incumbent government to seriously work on a long-term plan to introduce and implement much-needed and long overdue structural reforms in an effort to stabilize Pakistan’s economy by getting out of the debt recycling circle. Also, according a recently published report in a newspaper, Pakistan’s current fiscal deficit continues to balloon as the gap between income and expenditure has already grown over Rs2.3 trillion during the ongoing fiscal year despite introducing mini budgets and massively slashing the development budget. How the current Pakistani government can deal with this issue without reforming its system is another million dollar question.Tarique Ahmed AbroHyderabad

from The News International - Newspost http://bit.ly/2I3u8ZM