The US has magnificently succeeded in influencing the two largest institutions in the world: the International Monetary Fund (IMF) and the World Bank, which are employed as a tool in their enlargement plan; to further US economic neoliberalism-based foreign policy. Since 1950, Pakistan has been a member of the IMF. IMF gives Pakistan loans; therefore, they create policies on how these loans will be used, ultimately taking advantage of Pakistan.
The conference that took place in Washington on July 1944 led to the formation of two institutions; International Monetary Fund and the international bank for Reconstruction and Development (IBRD), to shape the world economy. These institutions were established to secure the global dominance of America by ensuring the prevalence of the American dream of a capitalist ideology in the world. IMF was created to provide loans to countries to solve the balance of payment crisis for trade continuation, which in my opinion is helping countries solve their external debt by generating another external debt that’s much more.
Whereas, the bank was supposed to provide loans for post-war development, to rebuild the infrastructure such as roads and railways. These are merely claims, though. They failed to alleviate poverty and bring about the development they had envisioned. Instead, they have been working from its founding to integrate governments, particularly those of less developed nations, into a powerful economic system, dominated by large transnational corporations.
The third annual report of the World Bank, centered on the need for bank services, accused the borrowers of not borrowing from the World Bank. It attributed economic instability to borrowers’ lack of technical and planning expertise. The report’s substance should have focused on attracting investment and opening doors for these developing countries, but it didn’t. Everything ensured colonial trade and the economic pattern that existed during the colonial period. Although developing countries are no longer colonies, these smart minds have still found a way to colonize our minds.
America tried hard to implement its free market policies, exploiting every opportunity it got. 1979’s oil crisis was brought on by a decline in oil production following the Iranian revolution, which prompted oil prices to soar. Countries started rushing to the IMF for the balance of payment support. The IMF found it difficult to meet the rising demand for credit. Hence, they seized the chance to impose their views regarding the free market. These smart people at Washington consensus established policies for developing countries suffering from a negative balance of payments, seeking help from organizations like the World Bank and the IMF. According to them, the goal was to foster development by implementing these policies. Leaders of the developing world were convinced that obtaining further loans to pay off previous debts would undoubtedly be beneficial. They must thus take structural adjustment reforms into account.
Whoever seeks assistance from these agencies is given the same remedy for various challenges. They adhere to the bank’s adjustment programme policy, which is a one-size-fits-all approach. These institutions claim that structural adjustment policies (SAP) lower inflation, promote economic growth, reduce fiscal and balance of payments deficits, and stabilize the economy by reducing external debt. The reality of these structural adjustment projects, however, is substantially different from the image presented by policy implementers. Pakistan, a nuclear power country, has been under the IMF program for the 22nd time but has only got poverty and debt n return. The money that we could have invested in improving health services, and fostering education and housing, is being used to repay the rising debt, making bankers in industrial countries wealthier. Considering Asian countries, China and Japan have experienced high growth rates, particularly because their focus was on state-directed policies. We are being hurt by policies that we didn’t make. Those western economists who used to claim that the neoliberal structural adjustment policies would reduce the debt burden must look at the debt burdens Pakistan has reached.
The proposed solutions in SAP call for a currency devaluation to encourage exports, trade liberalization through the elimination of protectionism, privatization of enterprises to improve performance, deregulation which involves the elimination of maximum and minimum prices, creation of incentives to draw in foreign investment, and the elimination of consumer subsidies to lower the budget deficit. Here, the question arises: If these policies are the best option available, why has Pakistan, which is a participant in the IMF programme, been unable to address its issues?
These policies prove devastating for developing countries. In reality, when a currency’s value falls, exports become more competitive and imports become more expensive. A devaluation typically increases inflationary pressures because of greater import costs and growing export demand. Secondly, producing exports drive up the cost of basic goods; reducing consumption and since importers can buy our exports for less money, we continue to run a deficit. Trade liberalization simply makes it easier to export resources to the west, as it happened throughout the colonial era. Moreover, privatizing enterprises also implies giving up all potential profits from those businesses.
Government deregulation, which involves the elimination of price controls and subsidies, also increases the cost of goods and services consumed by the poor, hence lowering consumption. SAP taxes people in order to earn more income, usually through a repressive taxation system that causes real wages to plummet. Furthermore, raising discount rates, slows down economic activity, discouraging private sector investment which increases unemployment.
Policies devised by colonial institutional structures were not intended to benefit people, but rather to facilitate the process of extreme exploitation. Pakistan established western policies as a benchmark for development. Pakistan must realize reality before it’s too late as its economy is deteriorating super-fast. The West, especially the USA, is supporting the domination of the neoliberal economic world order on a global scale. Under the guise of modernization and development, they are actually attempting to exploit and subjugate weaker nations. According to post-development theorists, the primary goal of development is to raise people’s standard of living. However, rather than getting better, it is getting worse. Would Pakistan have wanted such development? Clearly, it isn’t what Pakistan expected.
