Pakistani Economy Still Struggling Despite IMF And Chinese Intervention And Investment

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Economic situation in Pakistan only to worsen so long as support for radical organizations continues.

Written by Paul Antonopoulos, independent geopolitical analyst

Pakistan’s economic managers are telling the country’s top leaders that they have no option but to remain under the existing International Monetary Fund (IMF) programme worth $6 billion to prevent a full-fledged economic disaster. In fact, it was revealed only days ago that Pakistan’s evasion of structural reforms had compounded its financial problems.

This is the first time in Pakistan’s history that its negotiators had to capitulate to IMF conditions, i.e. the parliamentary approval for the passage of the Tax Laws (Fourth) Amendment Bill and State Bank of Pakistan (SBP) Autonomy Bill.

This is likely to cause political chaos in Pakistan as the opposition in the Senate claimed on Wednesday that the government had signed a “document of financial surrender” with the IMF and warned against making the SBP answerable only to the IMF.

Former Senate chairman and Senator for the opposition Pakistan Peoples Party, Mian Raza Rabbani, highlighted that Article 77 of the Constitution reads: “No tax shall be levied for the purposes of the federation except by or under the authority of Majlis-i-Shoora (parliament).” He also complained that no meaningful discussion took place in parliament regarding the issue.

Leader of the House in the Senate Dr Shahzad Waseem instead blamed the economic situation for the “mismanagement” of previous governments, stressing that the current government had to return debts worth $55 billion. He added that the current government had already returned $29 billion over the past three years and that another $12 billion each would be returned this year and next year respectively.

Successive Pakistani governments have not acknowledged their inability to implement the identified and agreed necessary structural reforms, specifically in the prevailing tax structure and energy sector. The IMF have argued in favor of full cost recovery to raise utility charges.

Although the IMF, as well as other multilateral agencies, have been criticized in Pakistan because of their harsh upfront monetary and fiscal policy conditions that have eroded its growth rate, the country is currently on its 23rd IMF programme. Each programme typically has a three-year duration, meaning that Pakistan has been on an IMF programme for around 69 years of its 74-year history.

Pakistan has always struggled economically since achieving independence from the British in 1947. Along with poor economic planning and management, Pakistan also has a bloated military budget because of its maintenance of nuclear weapons, funding and arming of terrorist organizations, and using the military to try and realize its claims over India’s Jammu and Kashmir.

It was heralded that the China–Pakistan Economic Corridor (CPEC), a collection of infrastructure projects under China’s greater Belt and Road Initiative, would bring desperately needed jobs, infrastructure and investment to Pakistan. However, the International Forum for Rights and Security believes that the ongoing protests and attacks against CPEC will prove to be detrimental for infrastructure projects and investments in Pakistan.

“There has already been a decline in Chinese investment in Pakistan. This can be detrimental for future foreign investment in Pakistan, inflicting further damages to the ailing economy,” said the think tank.

The think tank’s comments were made in the context of protests in Gwadar, the port city that is considered China’s crown jewel of CPEC. Dangerously, the Jamaat-e-Islami pro-Shariah organization, one of the largest politico-religious groups in Pakistan that wields huge societal influence on the majority of Pakistanis, declared their support for the protests. Effectively, some of the most extremist elements in Pakistan are now openly against Chinese investment and are increasing their anti-China campaign, especially in the context of Beijing’s alleged treatment of Muslim Uighurs in Xinjiang province.

Last month, thousands of Pakistanis protested in Gwadar against Chinese activities in the region, claiming that China negatively affects local livelihoods. Jamaat-e-Islami leader Maulana Hidayatur Rehman made over 19 demands, one of them being a call for action against the “trawler mafia” — Chinese fishermen fishing and docking on traditional grounds.

With frustrations that Chinese workers are perceived to be taking Pakistani livelihoods, Chinese workers and nationals are continually targeted in terrorist attacks. Nine Chinese workers were killed in a bus blast on July 14, another was shot and wounded on July 28, and one was wounded in a suicide bombing on August 20. This is just a few examples of a plethora of attacks targeting Chinese workers and nationals in Pakistan since CPEC was launched in 2013.

With the IMF losing patience and set to impose harsh measures, a decline of Chinese investments in the country, being listed on the Financial Action Task Force’s monitoring ‘grey list’ for funding terrorism, and with the European Union threatening sanctions, Pakistan is in an extremely difficult economic situation and is struggling to rectify it.

However, Pakistan’s economic woes stems from its uncompromising position on supporting terrorism. Pakistan weaponizes terrorism to spread its influence in Afghanistan and maintain constant pressure on India. But Pakistan’s fostering of radical Islamism is now driving away desperately needed Chinese investment and gives reason for the IMF to take greater control of the country’s finances. In this way, Pakistan cannot enjoy any respite or true progress for its citizens until it debloats its military budget and ends its support for terrorist and radical Islamist organizations.

MORE ON THE TOPIC:

• Terrorist Threat Grows In Pakistan: Security Forces Hunt Down Tehrik-i-Taliban Pakistan Commanders (Photos)
• Pakistan Slips On A Slippery Slope Of Religious Militancy

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