(April 18-2023) Saifuddin Sheikh, Executive Director of Pakistan Economy Watch (PEW) on Tuesday said the IMF is sitting on more than 1000 billion dollars but it is constantly ignoring many poor countries that are stuck in difficulties.
The policies of the lender are affecting its influence and reputation, and many countries are not listening to it, he said.
Saifuddin Sheikh said that despite massive capital, the international organisation is ignoring many countries that are asking for one to three billion dollars, which is reducing confidence in this institution.
The IMF continues to alter its conditions for loans for political gains; therefore, it would be better to call it the Western Monetary Fund instead of the International Monetary Fund because it has focused on the development of western countries.
The business leader said that many countries are frustrated with the IMF and are now looking to China for loans.
Currently, 65 countries have to return 15 percent of their external debt to China. And in the case of Pakistan, about 30 percent of its external debt is taken from China, which is increasing.
He said that the IMF never presses poor countries to raise taxes on the privileged class; it always targets the common man.
The IMF has been subject to a range of criticisms, generally focused on the conditions of its loans; it has also been criticised for its lack of accountability and willingness to lend to countries that are known for corruption of rulers and wastage of funds.
The IMF always stresses reducing government borrowing, increasing taxes and interest rates, and lowering spending. It also calls for allowing failing firms to go bankrupt. Its structural adjustment, privatisation, and deregulation have seldom worked as expected.
He recalled that during the Asian crisis of 1997, many countries such as Indonesia, Malaysia, and Thailand were required by the IMF to pursue tight monetary and fiscal policies to reduce their budget deficits and strengthen exchange rates.
However, these policies caused a serious recession with very high levels of unemployment in these countries, which was a failure of the lender.
He noted that it is very difficult for a country to develop under the IMF’s umbrella, which is why the number of countries that take help from it is reducing.
No country can develop until it implements such reforms and policies in such a manner that it no longer need loans from the IMF and other international institutions, he observed.
