Give IMF reforms a chance!!

[ganeshran]

I know the reforms suggested by IMF are painful. They increase taxes and petrol prices at a time when already the public is suffering.

But IMF reforms are like bitter medicine. In the long run they are good for your country.

India was almost near bankruptcy in 1992, we had to ship out sovereign gold reserves to avoid default. Foreign exchange was very very low. IMF refused to give money until painful reforms and liberalization happened. The current PM Manmohan Singh was the finance minister then and he took a lot of painful decisions which looked bad for the public but had a great benefit long term. The rest of the world also became ready to invest money in India.

China which implemented reforms much before India is in a far better position economically than us. So the longer you guys wait, the more difficult it is going to become!!

[Ismailtoca]

Lol, I am as of right now writing a summative proving why IMF reforms are crap, and I might just post it up here once I am done

[Markhor]

Unfortunately our ministers are very short-term thinkers.Dr Abdul Hafeez Sheikh,our finance minister has been doing a very good job,putting pressure on Gilani to cut government waste and implement the IMF terms but with the coalition partners and opposition parties making threats,Gilani has had to cave in and agree to not to increase petrol prices and taxes.

[Tapori]

ganeshran

China have not needed the IMF for growth. India didn't "Have to" listen to the IMF and could easily have grown without its shackles.

Pakistan has enough resources to attract foreign investment; Just simply accruing more from Taxes + Stemming corruption would be enough not go begging and whoring the country out to the IMF Pimps.

Recent indebted countries to the IMF that included Ecuador, Bolivia and Argentina, all recovered well after giving the IMF the proverbial Middle Finger.

I'm not some hippy freak, but watching how the IMF act like a ruthless PIMP, dictating who, when and how countries should spend money is apalling in its blatant self-interest.

Remember; The IMF is not the UN. Its interest is Profit, and Profit alone.

This is the same IMF that has in the past 20 years:

Turned Argentina into a 3rd world country
Lent to a Corrupt Bolivian government for "Water Infrastructure Development" on the basis that they would Privatize Water! This led to millions of Poor unable to afford water dur to IMF imposed price hikes.

Its the IMF that approves of "Austerity" here in the UK and across Europe.

A Big F U to the IMF Mafia (Thats what it is; Read up man)

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[KB]

Seems like a play-back of the 1990s. The austerity measures of the IMF in the 1990s increased democractic instability in that decade.

It must be pointed out that only around 1% of the population pays direct taxes. Pakistan tax to GDP % remains very low. With much money being spent on defence, this is clearly a big problem.

[waqar_ahmad]

Raising more tax money, DOES NOT mean making poor people, who already pay ALL the taxes of the country, pay even more.

It means broadening the tax net, and getting rich people who dont pay taxes, to pay.

IMF is a bank, that wants its money back, by hook or by crook. SO they tell the govt to raise taxes, instead of telling them to broaden the tax net.

Pakistan should have stayed away from IMF and its reforms

[the SHA]

What a terrible joke this thread idea is!

[ganeshran]

I know the general public feelings about IMF are very hostile because they propose some highly unpopular measures.

But IMF measures make the country more open to foreign investment, and every country needs foreign money to grow. As more money comes in, local industries will grow stronger and eventually hold their own. More jobs will be created, society as a whole will be improved.

[suhaib]

bitter medicine?, dude its poison and it kills in you in a short time which means there is no long run.

the greatest economists and reformers out there have written in large how the IMF are financial terrorists, read out what people like Jim Rogers, Marc Faber, Ron Paul, Peter Schiff and others have said about it.

[suhaib]

I know the general public feelings about IMF are very hostile because they propose some highly unpopular measures.

But IMF measures make the country more open to foreign investment, and every country needs foreign money to grow. As more money comes in, local industries will grow stronger and eventually hold their own. More jobs will be created, society as a whole will be improved.

no it doesn't. how does taking an imf loan bring investment.

we have taken imf loans through out our history yet there was no FDI, however in musharrafs era when there were no imf loans our FDI went up from $500m to $8.5b, thats over 1000% increase. IMF has nothing to do with bringing in FDI

[ganeshran]

It is a loan, but the reforms create a conducive atmosphere for more foreign investors putting money in it.

Investors feel more confident to invest, so FDI increases and growth increases.

[wasim-fan]

Correction. I don't think India or China acted under any force from IMF. India liberalized its economy as per a in 1992 Industrial Policy by Manmohan Singh. It was a matter of debate for a very long time.

I don't believe IMF is a solution for Pakistan as other posters have pointed out. Once the security situation and leadership improves, there will be greater foreign investment leading to great employment. With 70 % of pop less than 30 they have a driving work force, so things will pick up pretty quickly. And as everyone said, more efficient tax collection is paramount

[suhaib]

It is a loan, but the reforms create a conducive atmosphere for more foreign investors putting money in it.

Investors feel more confident to invest, so FDI increases and growth increases.

doesn't work and has never happened.

[ganeshran]

Correction. I don't think India or China acted under any force from IMF. India liberalized its economy as per a in 1992 Industrial Policy by Manmohan Singh. It was a matter of debate for a very long time.

I don't believe IMF is a solution for Pakistan as other posters have pointed out. Once the security situation and leadership improves, there will be greater foreign investment leading to great employment. With 70 % of pop less than 30 they have a driving work force, so things will pick up pretty quickly. And as everyone said, more efficient tax collection is paramount

China did it on their own, India didnt have any other choice. Anyways, ultimately its for the people of Pakistan to decide. I just offered a viewpoint.

From wikipedia:- http://en.wikipedia.org/wiki/1991_India_economic_crisis


India started having balance of payments problems since 1985, and by the end of 1990, it was in a serious economic crisis. The government was close to default,[1] its central bank had refused new credit and foreign exchange reserves had reduced to such a point that India could barely finance three weeks’ worth of imports. India had to airlift its gold reserves to pledge it with IMF for a loan.[2]

The caretaker government in India headed by Prime Minister Chandra Shekhar, and Finance Minister Yashwant Sinha’s immediate response was to secure an emergency loan of $2.2 billion[9] from the International Monetary Fund by pledging 67 tons of India's gold reserves as collateral.[2][9] The Reserve Bank of India had to airlift 47 tons of gold to the Bank of England[3][5] and 20 tons of gold to the Union Bank of Switzerland to raise $600 million.[3][5][10] National sentiments were outraged and there was public outcry when its was learned that the government had pledged the country's entire gold reserves against the loan

P.V. Narasimha Rao took over as Prime Minister in June, the crisis forcing him to rope in Manmohan Singh as Finance Minister, who unshackled what was then called the 'caged tiger'.[3] The Narasimha Rao government ushered in several reforms that are collectively termed as liberalisation in the Indian media. The forex reserves started picking up with the onset of the liberalisation policies and peaked to $314.61 billion at the end of May 2008.[11]

[Maula Jutt]

The comparison is wrong. China and India, in the past, were closed economies that needed liberalization to compete in the world. Pakistan, on the other hand, has had a very open economy. It's not trade liberalization that IMF wants from Pakistan. The trade is already very liberal. Instead, IMF wants Pakistan to tax people it is already taxing even more.

Increasing prices to get rid of protectionist policies in a country is different than increasing prices of an already liberal economy just to get the loan money as soon as possible.

Pakistan needs to widen its tax net, as someone else pointed out above, instead of taxing more.

[Krishnan]

Just to keep it short,liberalisation and reforms was a policy which india had been forced to go for,but on the other hand what has been the impact of it in the last 50 years.To me personally,the negative effects have overshadowed the positive effects.

Democratic socialism is always the way to go,but our PM seems to think otherwise always telling GDP ,industry,foreign investment.Agriculture has and will suffer hugely due to more importance to service sector,with more reforms volatility in the system increases,total foreign domination in certain areas removing local markets,of course the traditional saying is hugely felt now "rich get richer,poor get poorer".This thing has completely changed even human culture and mentality.

The thing you are saying resembles what our pm is saying.But one thing that must be understood is investment,reforms,growth will not only affect economy but will affect all sectors.It should affect in a positive way but these days lots of negatives.No inclusion no reforms.

[Tapori]

Krishnan - Thank you;

You see, people literally see all teh shiny new things and don't realise that doesn't represent growth of society; Just because Ram Chand and Altaf bhai from down the road have a mobile, doesn't mean the country as a whole has the freedom to implement popular socialist Policy that helps everyone.; not just a few that can.

Please India; Don't fall into the trap that just because some have you have moved to "Middle Class" that that somehow separates you from the "Working Class"; Indeed you are one and the same; Just your salaries may differ.
You both invariably work for someone (Save those who have their own enterprise)

If you regard Gandhi as the philosophical/spiritual forefather of modern India, His philosophies would be the exact polar opposite of those sanctioned by the IMF.


Ganeshran - You seem to just ignore the piles upon piles of evidence that demonstrably shows that the consequence of the IMF, is that indebted countries inevitably have much of their country's wealth, asset stripped to pay for exorbitant IMF rates.

Yeah Ganeshran, isn't it great how more and more of your country will be owned by less and less of your population.

Not mention that in such countries the Rich get Richer and the poor get poorer.

You say "India had no option"; Where is the evidence for this?

Brazil didn't "Need" the IMf for growth; If you needed a democratic alternative economic model to the totalitarian CHinese.

So what meant India needed the IMF to instill reform? Are you saying that unless the IMf *****-slaps you into getting your house in order by making you a creditor to them, that you couldn't have improved?

The above says more about what you think of the Indian nations ability to evolve; The fact that you think it required being dictated to by the IMF; Gandhi would be turning in his grave. - Is that what the revolutionaries fought for?

To replace British Colonial rule with a Global Banker IMF Colonial Rule?

[kkmix]

The reason it will not work for country like Pakistan is because of the corruption. Money will go into the pockets of 2% elites of the country and never be invested in people of Pakistan. Instead it will backfire them through higher taxes. Agriculture taxes must be implemented as the large portion of revenue comes from agriculture but there is near to no tax implemented currently on them. This may solve he issue.

[ganeshran]

Lets see the primary premise here. A small e.g. A bank lends you money to start a shop. What will they require to make sure they get their money back?

a) A collateral or security for the worth of loan
b) Or sufficient evidence of profitability of your future shop so they are sure about your ability to return the money.

IMF is going for the second option, they want the revenue generation to be higher for them to guaranteed to get their money back. Simple. Regarding the very low tax net, that is absolutely right. Widening the tax net needs to take priority, but RGST also needs to implemented to first get the money from IMF.

I dont think IMF has anything against Pakistan to subject it to harsh policies. Its simple economics - Its gives a large sum of money and expects it returned with interest, and while giving it, uses its muscle to get liberalization implemented in the country.


If you regard Gandhi as the philosophical/spiritual forefather of modern India, His philosophies would be the exact polar opposite of those sanctioned by the IMF.


I completely consider Gandhi and Nehru to be the forefathers who shaped India and regard them very highly. But their education was in a time in UK when the whole academic atmosphere was (and still is) very left leaning - both Socialism and Communism ruled. Their political vision worked very well for India, but their economic vision wouldn't help us today, maybe it did in the 60s - 90s, but not today.


You say ; Where is the evidence for this?


From wikipedia http://en.wikipedia.org/wiki/1991_India_economic_crisis
It says there was $2.2 billion emergency loan was sanctioned by pledging almost entire gold reserves the country. Just as now, IMF loans came with similar conditions before and the current PM worked on the liberalization and reforms.

[ganeshran]

Just to keep it short,liberalisation and reforms was a policy which india had been forced to go for,but on the other hand what has been the impact of it in the last 50 years.To me personally,the negative effects have overshadowed the positive effects.

Democratic socialism is always the way to go,but our PM seems to think otherwise always telling GDP ,industry,foreign investment.Agriculture has and will suffer hugely due to more importance to service sector,with more reforms volatility in the system increases,total foreign domination in certain areas removing local markets,of course the traditional saying is hugely felt now "rich get richer,poor get poorer".This thing has completely changed even human culture and mentality.

The thing you are saying resembles what our pm is saying.But one thing that must be understood is investment,reforms,growth will not only affect economy but will affect all sectors.It should affect in a positive way but these days lots of negatives.No inclusion no reforms.

I totally agree that capitalism is a system with many flaws, but its counterparts which are utopian in their outlook have had even more disastrous implementations. There is not a single socialist or communist country today which has actually achieved anything noteworthy economically.

Of course you may point out China as a communist success, but it was those very communist principles that Deng Xiaoping had to let go to bring China to its successful position today.

IMO Socialism as a system failed because it put society over the individual, it tried to stress on the common good to override the individual good. But to tell the individual of lofty principles of common good where his own were suffering, were never of much use.

[Tapori]

IMO Socialism as a system failed because it put society over the individual, it tried to stress on the common good to override the individual good. But to tell the individual of lofty principles of common good where his own were suffering, were never of much use.

Yep, lets ignore Germany, Denmark, Netherlands, Beligium and the Scandavian Bloc... Mostly Democratic Socialists!

I dont think IMF has anything against Pakistan to subject it to harsh policies. Its simple economics - Its gives a large sum of money and expects it returned with interest, and while giving it, uses its muscle to get liberalization implemented in the country.

Exactly; Its not just Simple Economics its Gangster Economics. Hell, even your example of India had pure collateral; The IMF AFAI read were not professing to "Muscle" Policy on the back of that loan.

With this Pakistan Policy, they are "Dictating" Economic policy; and if you can't see how wrong that is then I don't think you have the Pakistani populaces best interest at heart.

Just admit that the IMF will go to extreme lengths to "Get a Profit";

So what if inflation reaches epidemic levels a result of Increased RGST's ; I mean the country has only barely recovered from a flood where 10 million people were displaced;
Who gives a crap if more people die of more hunger? We need collateral for our loan!

But you mis-read the Paksitani Situation and do yourself a disservice.

From the link you posted, India used its Gold Reserves as Collateral; Enabling them to do what they wanted (AFAIK) with the money received.

What you say is:

Pakistan need Money; The IMF is giving the money so chill and go with what they ask for, don't worry, it is best in the long run.

What we say:

Pakistan does not need IMF loans.
If the IMF do provide a loan, why not, I don't know, use Tax receipts from Pakistan's main resoucre - Its Agriculture owned by Feudals, as the "Gurantee"?

Now Ganeshran please explain, why is it fair the common Pakistani Man pays a higher rate for goods and services to provide "COllateral" for the loan?

Wouldn't the better more secure and profitable option be to tax the Feudals?

Because at the moment they pay 0. Yes 0.

So even if I agree that Pakistan, by your definition, needs the IMF loan, Why shoudl the RGST be the "Guarantee"?

And in any case, the tax collection is the key problem; By adding RGST, you do not solve the issue of non-collection of Tax, if anything it does anything but solve taht core problem.

So to summarise Ganeshran:

The IMF's History is very sordid in terms of "The greater Good";
From Bolivia, Argentina, Ecuador and many other Latin American countries which were looted and pillaged to companies the "IMF" approved of in asset stripping entire regions and bringing enslavements of entire populations.
You sight one IMF example of India, a loan which was an emergency loan for which India used Gold as collateral; A completely different situation to the Paksitan situation you seem to be so keen on advising on.

Pakistan does not need the IMF; As proven by its heaps of non-collected Taxes, to which the IMF loans would not provide a solution.

This isn't an anti-Capitalist rant; Simply that the IMF is the most darkest manifestation of unregulated Capitalism; A reality endured by many people the world over.

[KB]

I completely consider Gandhi and Nehru to be the forefathers who shaped India and regard them very highly. But their education was in a time in UK when the whole academic atmosphere was (and still is) very left leaning - both Socialism and Communism ruled. Their political vision worked very well for India, but their economic vision wouldn't help us today, maybe it did in the 60s - 90s, but not today.

Gandhi’s own economic ideas were unacceptable or considered idiosyncratic to many in the Congress. Deeply sceptical of modern civilisation and the modern state, Gandhi glorified the ancient past and envisaged a political system of self-governing and self-sufficient villages. His India of his dreams was a rural country with little state intervention. After independence he advised the Congress to ditch power and become an organisation of social workers.

Nehru, however, believed in modern civilisation and in the power of the modern state to transform society and individual life for the better. He was certainly influenced by the intellectual milieu of the time. He was committed to social uplift for the underprivileged. Socialism was an important foundational idea, but the reality differed from the rhetoric. What in effect emerged was a mixed economy or what some have dubbed ‘state capitalism’. There were many reasons for this. There was a certain tension between Congress’s call for unity (and its projection as an embodiment of that unity) and its professed aim of social transformation. The latter objective would have put a strain on the idea of complete unity as it would have brought social groups into conflicts. This problem was avoided during the freedom struggle, by the casting of the colonial rulers as the cause of problems, and hence the need for unity to oust them. Privileged social groups, interested with maintaining their economic positions, had also supported the Congress during the freedom movement and stayed with the party after independence. Patronage politics also proved to be a double-edged sword for the Congress. Whilst it facilitated accommodation it led to a dilution of ideology.

There were many other factors of course but, ultimately, most would acknowledge that socialism was more a promise than a reality.