Defence Minister Rajnath Singh has slammed Pakistan over its latest IMF bailout, stating that India would have given a larger bailout package to Pakistan than sought by Islamabad from the IMF, had the neighbouring nation maintained friendly relations with New Delhi. This is cash-strapped Pakistan’s 25th such loan and over the years, Pakistan has made many tall claims
In April 2024, pm Shehbaz Sharif stated that IMF funding would help stabilize Pakistan’s economy. However, the reality is that instead of owing $10.1 billion dollars to IMF, now they owe them over $19.4 billion dollars.
PM Shehbaz Sharif had thanked the crown prince of Saudi Arabia for depositing $2 billion dollars to Pakistan in 2023, stating that it would strengthen its forex reserves. Pakistan’s forex reserves in 2023 stood at $13.73 billion dollars and now it stands at $8.21 billion dollars.
On 2nd September 2024, PM Sharif stated that Pakistan’s economy was moving towards stability. Well, the fact of the matter is that compared to $374.4 billion dollar GDP in 2022-23, now its GDP stands at $338 billion dollars. As many as 1.5 lakh people has lost their jobs, 6 ministries have shut down, food insecurity continues to be a problem and taxes have skyrocketed.
In an exclusive conversation, Devika Chopra, NewsX, Editor, spoke to four panelists namely Dr. Sharad Kohli, Senior Economist, Professor Madhav Nalapat, International Affairs Expert Pathikrit Payne and Ambassador Suresh K Goel, Former Diplomat who shed light on Pakistan continuously taking loans from the IMF, how India’s neighbours have reacted to the same and what is the role of US in the picture. Here are the excerpts:
Dr. Sharad Kohli, Senior Economist: This Money Is Going Down The Drain | NewsX Exclusive
When asked what is the IMF’s understanding when it comes to government ministries in Pakistan, Dr. Sharad Kohli, Senior Economist told NewsX, “I will flip the coin for a moment. We should not forget that the IMF is a common pool most of which is funded by American and other countries. But the larger question is does the IMF have so much funds that it is rolling down money on Pakistan knowing that it is not coming back. This money is going down the drain. In terms of consolidating the ministries and of course, the IMF lays down certain conditions that you have to hike your taxes, and cut down on the spending expenditure. However, that is not the point. The point is the IMF has not been able to assess that it is dumping money into an economy where it is going nowhere. It is just being spent on breeding terrorism. Now, that for me is a larger question.”
He added, “The entire money is going to have the same fate as in the case of earlier bailouts. The country which is not effectively growing- you can’t even use the word depression here because there is no foreign investment coming. There is no increased witness in the tax collection of the government, the rate of unemployment is rising. What is it that the IMF looks in Pakistan before releasing the funds.” He further shared, “Something has to be brought to the record. If you ask me, the IMF should be answerable. The money is not put to the right use and it is never going to come back. Turkey is not even lending money to Pakistan, Saudi Arabia is not cooperating anymore and China is also gradually turning its face away after its attack on the Chinese officials repeatedly.”
Professor Madhav Nalapat: Your Economy Won’t Grow If You Are Not Friendly With India
When asked is there any realization that ultimately the leaders within have shown signs of corruption, Professor Madhav Nalapat told NewsX, “That corruption is not getting any better. And, if I may say so, most of the luminaries in the government will safely have better fortunes abroad. Even if Pakistan completely collapses, they will be fine. The point of the matter is Pakistan illustrates a basic fact which is unless they had good relations with India, quite frankly, you cannot have good economic conditions in your country. And, this is what every country in South-Asia need to realize. Your economy won’t grow if you are not friendly with India. And, I don’t see Pakistan doing the same anytime soon.”
Mr. Nalapat added “This IMF sanctioned the loan under pressure from not just the United States, but also China. The latter wants Pakistan to be able to atleast repay interest on its own loans. And, therefore, wants to use the IMF to basically bailout itself. China is using its clout in the IMF to bail itself out to the bad loans it has given to Pakistan. So, that is why this loan has come. The officers behind those loans need to be held accountable- they are playing with India’s money.
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Pathikrit Payne, International Affairs Expert: Where Was World Bank And IMF When Sri Lanka Faced Severe Crisis?
When asked about Pakistan presenting this rosy picture of stabilizing their economy but the numbers do speak for themselves. To this, Pathikrit Payne, International Affairs Expert told NewsX, “As far as Pakistan is concerned, even if they have said that it’s not stabilizing, they would still have received the money. The money is not being given to them to become a better economy. It’s not given so that American companies can invest and create a world-class manufacturing hub. Instead, it’s given simply to keep them afloat because they have a nuisance value. As long as they continue what they do best—funding and maintaining terrorism, which is currently kept at bay but can be put to use when needed—they will remain relevant.”
Payne added, “Right now, you see so much outreach from Pakistan to Bangladesh, diplomatic movements, and even maneuvers within the United States. For instance, when Dr. Yunus, the interim Prime Minister, introduced certain banned elements to Mr. Bill Clinton and Hillary Clinton, it was all orchestrated and well planned.” He continued, “Pakistan will gradually help Bangladesh and try to make it another Pakistan, and that is why they continue to receive funds. This is not an economics debate. It’s not about the fiscal deficit getting better or structural reforms taking place. It doesn’t matter, as long as the dollar remains the reserve currency and Washington can keep printing it, funding IMF and World Bank for these purposes.”
Payne further told NewsX, “When Sri Lanka faced a severe crisis, where was the World Bank and IMF to bail them out? They didn’t come at that moment. It was on India to help and bail out Sri Lanka, because we do not want instability in our neighborhood, which could have had a downstream impact on India. But look at Pakistan’s performance over the years—there are two main aspects. First is its nuisance value, and second is its parallel economy, which keeps Pakistan afloat even without money from the World Bank or IMF. Pakistan’s government lacks the courage to cut even one paisa of the Pakistan Army’s privileges, making all the economic measures purely cosmetic. The IMF and World Bank may not care, as the money has already been sanctioned and will continue being disbursed. As for India, it’s countries like ours that work hard to become a $5 trillion economy. But Pakistan will be protected. We’ve been predicting Pakistan’s collapse for the last 10 years, but it hasn’t happened because the West keeps it afloat, and it will likely remain afloat for the next decade at least, as it serves a purpose.”
Ambassador Suresh K Goel, Former Diplomat: Bailout Package Not Merely An Economic Decision But A Political One
When asked what does India has to really focus on as the country has not been able to convince the other neighbours that Pakistan is a place where you put in money to burn and push and continue terrorism afloat in the region. To this, Ambassador Suresh K Goel, Former Diplomat told NewsX, “We have to realize that a bailout package to a country is not merely an economic decision but a political one, consciously made by countries that dominate the IMF. In the IMF, voting power isn’t ‘one country, one vote’—it’s proportional to their SDR shares. The U.S. has the largest share, and thus holds sway.”
He added, “My question is purely based on economic parameters, why should Pakistan receive a bailout? However, if we think about the consequences of a failed Pakistan—such as a massive influx of people across our borders, many of whom might be extremists—it becomes a different issue altogether. Our security forces could face an enormous challenge in such a scenario. India’s security is intrinsically tied to that of our neighbours, even if it’s not ideal. We did not vote against Pakistan’s bailout package. That decision, to support stability in the neighbourhood, underscores that point.”
Professor Madhav Nalapat: Can’t Choose Our Neighbours, But Pakistan Has Chosen Its Policy
When asked how does India deal with the bailout money not being contributed to economic stability but instead being used to fund terrorism and how can India convince major players like the United States of this issue? Professor Nalapat told NewsX, “Well, it depends on the president of the United States. For instance, Joe Biden has been to Pakistan multiple times but never to India before assuming office. That perspective shapes policy. Yes, we can’t choose our neighbours, but Pakistan has chosen its policy—one of hostility towards India. The Pakistan Army consistently maintains this stance, supported by political factions, making them antagonistic rather than cooperative.”
“The US Will Not Give Up On Pakistan,” Claims Ambassador Suresh K Goel, Former Diplomat
When asked how does a broken, partially afloat Pakistan continue to serve US interests? Ambassador Suresh K Goel, Former Diplomat told NewsX, “China certainly wants stability in Pakistan for its Belt and Road Initiative. But the United States has a longstanding interest in Pakistan as a geopolitical player. Pakistan’s position has historically provided the U.S. with a gateway to covert operations in Central Asia, Afghanistan, and even dealings with China and Russia. Despite the circumstances, the U.S. will not give up on Pakistan. This is a reality we must deal with, as Pakistan’s strategic importance for the U.S. remains intact.”
Check the full interview here:
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