Alternatives to Austerity and Neoliberalism in Pakistan

Draft position paper on the IMF deal and a progressive approach to the Pakistani economy

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Amid a worsening balance of payments crisis & spiralling inflation, Pakistan has agreed to a $6b loan from the IMF over the next 3 years, which will be the country’s 13th IMF structural adjustment program since the 1980s. Why does Pakistan keep returning to the IMF and what can be done to end this cycle of indebtedness, stagnation and economic dysfunction?

This paper tries to identify the structural and historical weaknesses in the Pakistani economy and the policies and interests responsible for perpetuating them. It argues that these longstanding weaknesses - of stagnant domestic production and inadequate revenue mobilization - have been perpetuated by the narrow interests and rent-seeking behavior of the country’s military, political and economic elites and exacerbated by a neoliberal policy framework in the fields of industry, agriculture, banking and finance, and education, health and labour protections.

The paper then outlines the parameters of an alternative approach to the Pakistani economy (pages 30-33), one that foregoes neoliberal austerity and focuses on creating a developmental state that prioritizes economic well-being over narrow security imperatives, stimulating domestic production instead of speculation, creating a system of progressive, direct taxation, achieving a fairer distribution of land and resources, investing in the education, health and well-being of working women and men, building an expanded commons and creating a strengthened regulatory apparatus that ensures resources are effectively and equitably distributed in the economy.

Orthodox policy analyses - and solutions - based on discredited and dated economic models have failed time and again in Pakistan and elsewhere, and we believe that is time to build consensus around serious progressive alternatives that can address our structural problems and build a productive and equitable economy that works for everyone, not just a few.

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