While Pakistan has been following structural adjustment policies under IMF programmes quite frequently since around the last four decades, economic outcomes have been less than satisfactory, to say the least.

In his (2016) ‘Springer’ published book ‘The economic impact of International Monetary Fund programmes: institutional quality, macroeconomic stabilization and economic growth’ the author of this article while reflecting on the report of ‘Independent Evaluation Office’ (IEO) of IMF indicated: ‘IEO (2002, p. 119) pointed out that Pakistan’s yearly economic growth was on average around 6–7 percent during the 1970s to the later part of 1980s, and the country was able to sustain its deficits in the fiscal and external sectors, without needing any major foreign assistance.

This situation changed during late 1980s when economic growth started to deteriorate and inability to deal successfully with deficits led to build up of debt. Hence, the country entered successive IMF programmes in the years to follow, starting around the later part of 1980s.

Looking back, the experience proved to be worse in terms of yearly economic growth during 1988–2000, which on average stood at around a little less than 4 %,while at the same time major macroeconomic indicators, for example, inflation rate, foreign direct investment, export growth, and import cover in terms of foreign exchange reserves, all slacked when compared to the earlier two decades (IEO2002, pp. 119–121). Since 2000, the situation has not changed much in terms of sustained macroeconomic stability and economic growth, although Pakistan continues to rely on IMF resources (with only an absence of few years during mid2000s).’

READ MORE: OPINION: IMF and WB conditionalities, and domestic policy—II

As indicated in the previous part of the article series, structural adjustment programmes underlying firstly IMF, and then later on World Bank were fundamentally based on two models – the ‘Polak model’ and the ‘Swan-Salter model’ – developed during the 1950s, both of which were influenced by neoclassical economics.

Hence, since the very start of their existence both IMF, and World Bank have strangely persisted with these two models as the main basis for their lending decisions, even as these programmes performed well below satisfaction. In doing so, it is clear that neoclassical economics – and by extension related fields to neoclassical economics in the shape of monetarist school of economic thought, and neoliberal-, austerity based economic policies – remained the main lens of both Bretton Woods institutions in forming their lending process, and formulating programme conditionalities; while strangely other schools of economic thought like Original Institutional Economics (OIE), Keynesian economics, social democratic policies, or ‘New Deal’ policies were strangely ignored.

Renowned economist, Clara E. Mattei in her (2022) book ‘The capital order: how economists invented austerity and paved the way to Fascism’ indicated that austerity policies were followed by design to preserve the ‘capital order’.

Structural adjustment programmes underlying firstly IMF, and then later on World Bank were fundamentally based on two models – the ‘Polak model’ and the ‘Swan-Salter model’ – developed during the 1950s, both of which were influenced by neoclassical economics.

The book pointed out in this regard the following: ‘While austerity policies may not be identified by name, they underscore the most common tropes of contemporary politics: budget cuts (especially in welfare expenditures such as public education, health care, housing, and unemployment benefits), regressive taxation, deflation, privatization, wage repression, and employment deregulation.

Taken together, this suite of policies [the ‘capital order’] entrenches existing wealth and the primacy of the private sector…Some economists have referred to austerity as a simple “policy mistake”, a technical miscalibration that produced suppression of domestic demand and tightening of labor markets.

READ MORE: OPINION: IMF and WB conditionalities, and domestic policy– I

This viewpoint dramatically underestimates the impacts of austerity… After all, the combination of fiscal, monetary, and industrial policies in the austerity playbook have dealt a lasting blow to the working classes and their expectations for a different socioeconomic system.’

Although the intention of the author is not to question the motivation of the staff of IMF and World Bank, but the argument above does raise question over the motivation of member countries overall of the Bretton Woods institutions, with likely more pressure coming from the considerable influence of rich, advanced countries – most of which........

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