Suchergebnisse

Strangely "to go or not to go to the IMF" continues to dominate the economic debate in Pakistan. All manner of statements have come out of the economic leaders in the government and their advisers. "We don't need to go to the IMF if we ban importing luxury items." "We can borrow our way out of our problems for our problems are only current financing." "With borrowing, IMF will reduce any conditions." These statements merely show the lack of understanding of the role of the IMF. As always, government has relied on hurriedly put together committees where people float in and out to consider this existential question. But the answer remains elusive. So, let us clear the confusion.

The IMF's role in world financial markets increased following the credit and housing market crises. One good change was the acceptance of a proposal made by the Meltzer Commission to adopt a "flexible credit line" that grants responsible borrowers a line of credit to use in emergencies. Some mistaken changes gave the IMF a large increase in lending resources, relaxed the requirements for reform imposed on borrowers, and increased loans to risky borrowers such as Ukraine. Borrowing should be used to prevent the spread of financial crises, not to bailout imprudent borrowers that mismanage their economy. Adapted from the source document.