Daily Time
The International Monetary Fund has offered developing countries a bitter pill. With the Iran war driving up energy costs and tightening already strained budgets, governments must either cut spending or restructure their debts. There is little quarrel with the calculations. But the Fund’s assertion that vulnerable economies have “no other choice” glosses over an awkward question: why must countries already living hand to mouth bear the steepest costs of a war they neither started nor control?
The irony is hard to miss. The IMF’s latest outlook projects global growth of 3.1 per cent in 2026, buoyed partly by investment in artificial intelligence. Yet this prosperity is hardly making the rounds. While wealthier economies reap technological dividends, poorer nations are counting the cost of expensive oil, fertilisers and food. For them, the much-touted global resilience offers cold comfort.
Pakistan knows this predicament only too well. Its latest staff-level agreement with the IMF, potentially unlocking $1.2 billion, provides breathing space, but hardly a clean bill of economic health. With energy prices biting into household incomes and inflation eroding purchasing power, Islamabad faces the unenviable task of tightening its belt without tightening the noose around ordinary citizens.
Yet blaming foreign creditors for every economic misfortune would be disingenuous. Pakistan’s fiscal troubles did not begin with the Iran war. Successive governments have bent over backwards to protect privileged sectors while leaving salaried taxpayers to foot the bill. Loss-making public enterprises continue to drain the exchequer, energy-sector inefficiencies remain stubbornly entrenched, and meaningful tax reform is invariably sacrificed at the altar of political expediency.
There is, however, a world of difference between trimming the fat and cutting into the bone. Eliminating wasteful expenditure strengthens public finances. Starving schools, hospitals and essential infrastructure of funds merely mortgages the future. Fiscal discipline should not become a convenient alibi for abandoning the state’s most basic obligations.
The Group of 24 developing economies has rightly called for greater access to concessional financing as mounting debt repayments squeeze public budgets. Creditors cannot expect countries to grow their way out of debt while simultaneously stripping them of the means to grow. Equally, governments cannot keep passing the begging bowl while refusing to put their own houses in order.
For Pakistan, the answer lies neither in reckless spending nor in austerity for its own sake. Tax privileges must go, public enterprises must earn their keep, and scarce resources must reach those who need them most. International lenders, meanwhile, must allow room for essential investment and credible reform.
Yes, the IMF is right that the bills must be paid. But there is no economic virtue in balancing the books at the expense of a nation’s future. *