AS the IMF’s most habitual client globally, we often get a dose of the Fund’s harsh medicine. Each time, business, civil society and other groups rightly object to an IMF deal’s harsh terms, but mostly after it has been struck. As an IMF team will arrive soon for a new deal, they must coordinate to influence deal talks.

Some blame our leaders but others the IMF for harsh deals. The problem starts with our governments — from Musharraf to the PTI. In their zeal to get high GDP growth, they take the faulty path of high fiscal and external deficits and money supply growth, instead of high investment, productivity and exports that require politically costly reforms. That path soon leads to high inflation and falling dollar reserves, and finally to the Fund’s door. But just as doctors often mistreat serious diseases caused by bad patient habits, so does the IMF often misdiagnose and mistreat economic ills caused by state policies.

The immediate patient symptoms before the IMF are usually high inflation and falling reserves due to high twin deficits and money supply growth. To stabilise the patient, the IMF usually prescribes higher interest rates, rupee depreciation, higher taxes and cuts in state expenses. All these put a brake on........

© Dawn