How we got into the IMF Trap

I was shocked to read a status message of a fellow bloggers on facebook. “IMF approves another $3.2Billion for #Pakistan bringing the total to $11.3Billion > with all the relief we are still no better > I think we are Royally Screwed for life“, it reads. Another fellow claims it as Zardair’s fault! This was a shock for me as the gentleman is very well educated, an online activist and very much familiar about economic and social issues.

Many of us get in to trap of slogans of political leaders who try to sell every thing for sake of some public support, some times we get confused and ignore the facts. Some of these leaders are disillusioned or unaware of economic and social parameters and others dishonestly exploit the public which is not supposed to be expert on every subject, the illiteracy adds the confusion. The simple rule, if you can not fight them, confuse them! The so called ‘leader’ earns popularity by cheating people, ‘intellectually’.

Let us began with basics. National economy is not different from household budget. We are a global village and trade in international community as a town or village do. If income of a household is Rs. 100 but spending is 150, then the family has to borrow to meet additional spending in shape of credit card or bank loan or even credit from community. The alternate is to increase the household income by working hard or producing more and spending less.

As the capitalist system grew, credit became more favorable option. You got one credit card and are unable to repay, buy another, then another and get some loanns. Still not enough, mortgage your house, your car and your property. This gives us more liquidity, more funds to spends. But we are not increasing our production and not adding in to our house hold income. This is just the ‘fake money’ we create but it is available to spend.

USA has spent a huge amount on a study in regime change in countries where USA has economic or strategic interests. The first and favorable is ‘change by an economic hit man’. They guy walks in office of elected or not head of state, offers him certain incentives and asks to approve certain projects in ‘national interest’, these projects means a economic death for nation. Not all heads of state are immune to 100’s of million $ in their Swiss accounts. Normally the ‘friendly’ suggestion is accepted and things go smooth.

There are some tough nuts who do not want to come to terms. The ‘Social hitman’ comes in to actions, riots, processions, the entire process mentioned in the book ‘Null’ is exercised. Peacefull processions lead by some ‘clean’ and honest ‘revolutionries’ who give people dreams and promise of good future. If this tactic fails, then there are two options, either use of country’s armed force by imposing ‘Martial law’ or direct assassination by Black Water contractors.

In our living memory ZA Bhutto was assassinated by an American backed General, Zia was killed because he betrayed the ‘Master’ and blew up Ojri camp, Benazir and Nawaz were removed by using Military. Then Pervez Musharaf again betrayed the master. This time the ‘Null’ was exercised. This ideiology has proved to be effective in ‘Yellow revolution’. But this time all options were on table. First the economic hit man, the former City Bank employee, facked the development, GDP and Poverty figures and pushed us in to a debt trap. Servicing this debt is a major share of our GDP.

To get the tarp around us, a rally was created in Stock market, fake growth rates and fake economic indicators. Thus lenders agreed to lend more. When US masters realized that they were being cheated in name of ‘war on terror’, Musharaf smelled a regime change and stopped payments of national and international commitments. IPP’s were not payed, the oil was imported on differed payments, commodity and electric prices were not adjusted as to leave it for next government.

CJ movement started like ‘Rose Revolution’, those who have read ‘Null’ know how exactly the process works. The newly elected government got differed payments, unpaid bills for IPP’s and so on. Any government in mess can solve the problem by selling national assets. But for that you need the environment where international investor can put their money. The option was closed by Mehsud’s sucide bombings, many believe Mehsud to be a CIA operative to kill Pakistani economy.

Where you go from here? But let us see what is the problem! The problem with our economy is that we spend more then we produce. USA do same. US trade deficit is around $700 Billion. It patronizes s the dictatorships in oil rich countries, they petro- doller goes to USA. Rest is met by borrowing. Our exports are around $10 billion while our imports are around $ 25 Billion. Now being in a global village, we have to borrow or ask for credit. The deficit comes around US $ 10 Billion during Musharaf regime. Overseas Pakistani’s send US$ 7 Billion to Pakistan every year. Still there is a gap of US $ 3 Billion. This is was being met by US aid of around $2 billion a year and rest by selling national assets (privatisations) and FDI.

Since Baituallah started suicide attacks, the FDI disappeared. The SC in Steel Mills Case set a rule that national assets should sold on ‘actual’ price. Now the international investors goes for gig gains. The corruption in Governments is a fact from USA to Ethopia. Investor will go for big gains. Baitullah and SC discouraged inside flow of money in form of privatisation and DFI.

Where do we stand? There are liabilities unpaid by Musharaf regime to IPP and international lender. Deficit was covered by US aid and privatisation/ CFI. USA added in to misery by stopping payments for WOT. This was the time of collapse. Pakistan neared to a bankruptcy. You got only one option, thats IMF. You go and borrow to meet your trade deficit. But IMF is a tool to implement US policies. It is no more a secret.

Let us conclude, we imports products worth US $ 25 Billion, we export products worths $ 10 billion. The deficit is met by money overseas Pakistani’s send home, around $ 7 Billion. Still there is a deficit of $ 8 Billion. Either we have to sell our properties to get $ or we have to fetch FDA. The last way is to stop using ‘imported stuff and reduce our import bill’. But still import of ‘Chalia’ (the thing used in paan) is growing.

Erey person dreams to drive a Japanese SUv, Every kid wishes to have a Black Berry, the money overseas Pakistains send back is used for buying imported cars and building useless concrete banglows. Not even 1% of that money goes to industry. So, with $ 8 Billion deficit, we have to hold a begging bowl. Even we stop spending any thing on education, health, police and administration and government, still we wont be able to meet with international responsibilities.

Now it is not in our control to expand our exports as electricity makes it impossible. We can not get FDI as Baitullah sends suicide bombers. We can not offer ‘sweetened deals’ to investors for FDI as ‘independent’ justice system doesn’t allow it. How we meet the deficit except borrowing from IMF? IMF debts come with imperial agenda. There is the way, we can show a national character and reduce our dependence on imported stuff. A nation which spend millions on ‘Chalia’ to spit on walls and roads can do that is a big question. Hit man is there to get us, but we are not there to defend ourselves. Let us pray for a wake up!