IMF and world bank as tools of intervention a case study of Pakistan

Abstract

MF is one of those controversial institutions which from the day of i~ estCj.blishment , till today . "-. ..~ ~ -.." .~ are topic of hot discussion from many circles including academia and -rri:edia. Three main functions are performed by IMF and they includes, regulatory, consultative, and financial. In performing its function important area of discussion is its concept of conditionality and this topic is subject matter of this study. Biggest criticism on IMF is that this conditionality is imposed on borrowing countries and it is a kind of intervention in their internal and domestic affairs which takes place without their will. IMF and its supporters take it as ownership and this study also focuses upon this controversy. The research investigates the controversial nature of IMF conditionality with a case study of Pakistan. In particular, it deals with the issue of impositionownership and how these international institutions are intervening in internal affairs of country .The nature of IMF conditionality can be examined with the help of the concept of power and how different actors use their influence of power in negotiations. The party with strong background and negotiation skill is usually winner. The countries that are borrowing countries have usually less strong ground so to deal with their fiscal issues they have to look to international financial institutions and to manage crisis they accept conditionality but this conditionalities often proved disastrous in long run. IMF never forced a government to go to them; governments go to the IMF for loans. Governments give their consents to the agreement. If the program is not successfully implemented, then it is fault of government and not the IMF, for example, Pakistan is a country where there is low resource mobilization, low tax to GDP ratio, poor taxation structure but high public expenditure. If the conditions attached asking for reforms than they are justified, its government faults that they spend a lot and generate less revenue. IMF programs are helpful in need of the hour as "last resort" in saving government tenure, but not in improving economy of a country. Improving economy in the country is the responsibility of governments. All borrowings arrangements with the IMF were based on commitment hat government will adopt certain economic policies which will improve issue of balance of payments. No doubt ground reality is that the IMF program bailout particular government in time of crisis, but it did not improve the economy of country by structural adjustment programs.