By Khalid Mustafa
ISLAMABAD: The nomenclature describes them as Friends of Democratic Pakistan (FODP) but ironically the same ‘friends’, in their latest Brussels huddle, lambasted United States and the International Monetary Fund (IMF) for being ‘unnecessarily soft’ on Pakistan and categorically wanted the two to strictly monitor the performance of the war-ravaged and flood-devastated country against given targets under the $11.3 billion Standby Arrangement programme and the loan being given to Pakistan under Tokyo pledges.
The FoDP countries asked US not to persuade IMF into giving waivers to Pakistan against missing out on any performance criteria targets arguing that repeated waivers would only make authorities in Pakistan complacent.
Sources privy to the Brussels meeting said the FoDP countries asked Pakistan not be complacent and to enhance its resource mobilisation through the introduction of tax reforms. “They also asked the Pakistani authorities to introduce reforms in the power sector, which is bleeding to the tune of Rs 226 billion per annum”, the source added. Pakistan, reportedly told the ‘Friends’ that power tariff is to be increased by 2 per cent every month till June 2011 and that about Rs50 billion would be generated through efficacy and reducing line losses in the current fiscal.
However, an obviously persistent FODP insisted: “Pakistan should seriously undertake resource mobilisation for the sake of its people,” sources said quoting proceedings of the Brussels meeting.
The official said that FoDP countries want Pakistan to perform and meet every target, regardless of the tough ground realities, so that it could pull itself out of the debt trap and strengthen its economic indicators by experiencing the economic discipline. “Every time IMF, under influence from US, gives relaxation to Pakistan a huge debt trap is laid down for the country,” was the FODP assessment, according to a source.
Some officials at the ministry of finance also confirmed these stances by saying that there was a strong realisation that the US wants to continue to provide oxygen to Pakistan through IMF, but at the same time also wants that Pakistan be further burdened by more debt so that Washington could easily twist its arm for strategic purposes.
Mentioning the financial releases from US to Pakistan, a close aide of Finance Minister Dr. Hafeez A Shaikh confirmed that Washington wants to provide financial help (oxygen) just to keep Pakistan afloat.
The money under the Kerry-Lugar Act, $1.5 billion a year, is now being shown by US in the accounts of FoDP and as flood relief. “So the propaganda that the US is giving a lot of money to Pakistan has no grounds,” argued the official, adding, “We are convinced the US does not want to help out Pakistan 100%, its frontline ally in the war on terror, but only to keep its head above water” he said.
So much so the World Bank, also influenced by US, in 2009-10 extended to Pakistan under $300 million development loans despite the fact that at the same time it has enormously increased its development loans to other countries after the global financial crisis. Pakistan which is facing financial stress because of the war against terrorism and also because of the recent devastating floods got less than $300 million in 2009-10 from World Bank. “We have also come to know that US representative in ADB exerted pressure not to extend huge credit line to Pakistan”, fumed a senior member of Pakistan’s financial team. “ADB is the only bank that helped Pakistan when Islamabad faced sanctions after it went nuclear in 1998,” the official said.
