Growth model and IMF conditionalities — I |
In a report ‘SBP governor calls for adopting durable growth model’ published in this newspaper on November 27, pointed out that the ‘…Governor of State Bank of Pakistan (SBP) stressed the urgent need for the country to move beyond temporary stabilisation measures and adopt a more durable, sustainable, and outward-looking growth model.’ Moreover, he also reportedly supported tight monetary stance, as pointed out in the same report, ‘He outlined the key differences between the current stabilisation phase and previous cycles, emphasising that macroeconomic discipline is now supported by well-coordinated, forward-looking monetary and fiscal policies. Unlike past efforts, this approach avoids the premature easing that has historically undermined stability.’
Similarly, World Bank in its October ‘Pakistan Economic Update’ pointed towards the need to continue with fiscal consolidation policies, and liberalizing the economy for greater gains on the growth, and exports side. Both the governor and the World Bank in its report called for less protective policies and underscored the need for opening the economy to greater competition. Hence, both the governor and the World Bank emphasized ‘Washington Consensus’, or more broadly neoliberal- and austerity policies. The World Bank’s report pointed out in this regard, ‘Ensuring exchange rate flexibility will be critical to managing potential negative current account impacts, safeguarding against the reemergence of dollar shortages, and maintaining hard-won gains in restoring business confidence. Returning to a trajectory of faster and sustained growth will also require sustained implementation of priority reforms, including broadening the tax base while strengthening tax administration, simplifying regulations, continuing implementation of the National Tariff Policy, reducing the presence of the state in the economy through state-owned enterprise (SOE) divesture, addressing high electricity costs, and rationalizing the public sector.’
Here, in particular, while the World Bank rightly emphasizes the need to enhance tax........