Political capital needed.

Byline: Fatima S Attarwala

All International Monetary Fund (IMF) programmes come with very high social costs of elevated poverty and unemployment. The moral of the Fund's structural reforms implemented around the world is the same: you need political capital to see the IMF programme through.

It is hard to find IMF's success stories. If the benchmark for 'success' is to step out of the spiral of debt-bailout-debt then one such example is of India. India approached the IMF seven times during the 1980s and '90s.

However, after the last package in 1993, it stepped out of the cycle and averaged a GDP growth rate of 6.61 per cent. The IMF projects its growth rate will be 7.5pc in 2020.

What does India have that Pakistan does not?

'India is a success story because it has political continuity,' said veteran economist Dr Hafeez Pasha. 'In the 1990s, P.V. Narasimha Rao and Manmohan Singh were able to implement their reform agenda while Nawaz Sharif got caught up in a political quagmire.'

'Reforms that the IMF suggested should be taken by Pakistan's political elite without the IMF's conditionality,' says S. Akbar Zaidi

The IMF styles itself a saviour of sorts, mandated to protect countries in severe financial troubles, unable to pay international bills. Its role is of crisis resolution with a key objective of reforms that provide crisis prevention in the future. But the question remains, have countries in need of the Fund's support benefitted from it?

Currently, the Fund has 36 lending arrangements of which the largest borrowers are Argentina ($57 billion), Ukraine ($17bn) and Egypt ($12bn). At $6bn, Pakistan's bailout is considerably smaller but comes with a very heavy price tag.

'This is the worst IMF programme that Pakistan has ever signed. All IMF programmes are bad, but this is the worst,' says political economist S. Akbar Zaidi.

Mr Zaidi is not alone in condemning the IMF programmes. Since 1958, Pakistan has reluctantly approached the IMF 22 times. But Pakistan is hardly the only country to be caught in a debt cycle that requires bailouts.

Washington Consensus

The IMF's funding did not always come with numerous strings attached. Since the 1990s, after the Latin American crisis, the IMF implemented 'the Washington Consensus' that demands structural reforms in exchange for immediate financial help.

In a one-size-fits-all formula, these include lower government borrowing to discourage high fiscal deficits, cuts in subsidies, free-floating currency...

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