Ahmed Mukhtar Naqshbandi
ISLAMABAD: The International Monetary Fund (IMF) should work with the government of Pakistan to protect the economically disadvantaged by expanding social protection systems and minimizing reform measures that risk further damage to the most vulnerable masses, Human Rights Watch said on Tuesday.
With poverty, inflation, and unemployment rising, the country is undergoing one of the worst economic crises in its history, endangering the rights of millions of people food, health, and an adequate living standard.
Officials from the government of Pakistan initiated formal negotiations with the IMF on 1st of this month, to discuss a plan to rescue the vulnerable economy, comprising an installment of $1.1 billion in loans from a $7 billion bailout that had been designed to ward off an economic meltdown in 2019.
Associate Asia director at Human Rights Watch Patricia Gossmansaid that Millions of Pakistanis were pushed into poverty and denied their basic social and economic rights adding that the Pakistani government and the IMF must address the crisis in a way to protect and prioritize low-income people.”
Twitter post by Eurasian Studies scholar Felicia Leffler:
Bailout package for Pakistan
Meanwhile, the central bank’s foreign exchange reserves in Pakistan have depreciated by 16 percent, to $3 billion, at the end of January 2023, an amount hardly enough for 20 days of imports. Immediate shortage in foreign currency that many imports, including necessary medicines, are scarce or out of reach.
Pakistan is experiencing with highest inflation levels since 1975, with the prices of perishable food items increasing over 60 percent in January 2023 and is fear to be increased further. In response to the demands of IMF, on January 29, the government enhanced fuel prices and removed the unofficial cap on the foreign exchange rate, leading to a drastic depreciation to the value of the Pakistan rupee, including a 9.6 percent loss in a single day in January.
Pakistan’s negotiations with the IMF, which prevailed till February 9, aimed at assisting countries with balance-of-payments crises. The IMF bailout package would ease the crippling dearth of foreign exchange and unlock access to other funding, including from bilateral and multilateral donors.
IMF Tough Condition
Pakistan is a party to the United Nations’ covenant that relates to economic, social and cultural rights, that safeguards the rights to health, housing, food, and an adequate living standard, among others.
The IMF recent conditions in the context of the current loan could either disrupt social and economic hardship or provide desperately required relief to the people of Pakistan while addressing the underlying causes of the crises. Several adjustments tabled by the IMF as conditions for Pakistan to receive the loan and address the immediate economic crisis might have both a direct and indirect negative impact on people with low income.
Human Rights Watch’s South Asia Director Meenakshi Ganguly posted the following tweet
In addition, the IMF has some more conditions, including the removal of subsidies on fuel, an increase in general sale tax, a market-based exchange rate, etc. However, a depreciating local currency, volatile inflation, and withdrawal of subsidies for fuel and electricity have already made it difficult for many people to meet their basic requirements.
Human Rights Watch said that the IMF program should conduct a reasonable assessment of the direct and indirect results these adjustments would have on poor people and adequately mitigate them, It should use part of the anticipated savings to protect social safety nets by adding a structural benchmark to expand coverage and boost social spending. The IMF should advise the government of Pakistan to enact policies to enhance women’s access to jobs by reducing barriers.
New tax amendments should be progressive in nature and should not encourage inequality and raise the cost of living in ways that jeopardize rights. Any withdrawal in subsidies for electricity, fuel, and natural gas must be preceded by a comprehensive reform plan that ensures all and sundry are able to access energy supplies essential for fundamental rights.
The IMF’s recommendations should encourage spending of the government on social services, such as education, poverty-reduction and health care programs, while, shoring up revenues of the government by strengthening the tax collection infrastructure and adopting stringent and transparent accountability steps.
Pakistan’s deepening economic crisis comes amid devastating floods in August 2022 that killed more than 1,700 people and damaged thousands of homes and millions of acres of crops, affecting over 30 million Pakistanis and causing billions of dollars in loss. In 2020 about Forty percent of Pakistan’s 230 million people were facing food insecurity, yet only 8.9 million families got assistance to mitigate the impact of rampant inflation.
Grossman added that the government of Pakistan should use the influx of funds to assist those worst- affected by the economic crisis. The IMF needs to provide Pakistan the time and flexibility to grab a sustainable, inclusive, and rights-based recovery.
