Mentions International Monetary Fund (IMF)

In this paper we provide an in-depth analysis of Pakistan’s macroeconomic situation.
We argue that although the stabilisation program signed with the IMF in November 2008 could
restore some "macroeconomic stability", it will depress the investment and unemployment
outlook, and it will not create the conditions that Pakistan needs for sustainable long-term
development. We put forward the foundations for a sustainable macroeconomic program for
Pakistan. This contains policy advice that differs markedly from that of the IMF. The essence of
the proposal is the consideration that a government that issues its own currency faces no financial
constraints or solvency risk. This implies that the usual “government budget constraint” has no
economic content. Based on this, we examine the potential role that the country’s fiscal and
monetary policies could play in promoting growth and in generating full employment and price
stability.

By following the IMF’s prescriptions, often at significant cost to national development goals, one would at least expect countries to have stabilised and avoided debt crisis. But 54 countries are now in a debt crisis and many are spending more on servicing their debt than on financing education or health.

The IMF has actively failed to prevent the present debt crisis which is today more severe than it was in the late 1990s and early 2000s.

Indeed, this hints at a basic problem. Debt is the source of power for the IMF. It is debt that forces countries to come to the IMF as the lender of last resort. It is debt that forces countries to accept the IMF’s harsh loan conditions and coercive advice on austerity, undermining their own development goals. Without debt, the IMF would be powerless!