IMF not flexible enough for countries like Pakistan. Now there will likely be numerous countries revealing this flaw.

More recent illuinating cases are Greece vs Iceland.

"Before joining the euro, Greece had persistent budget deficits, high levels of public debt, and usually also current account deficits (Baldwin and Giavazzi 2015). For 90 years since its independence, the country was in default on its external debt and shut out from international capital markets.

In contrast, Iceland ran surpluses since the middle of the 1990s and reduced the level of public debt, which was very low when the Crisis hit in 2008."

https://www.weforum.org/agenda/2015/11/iceland-vs-greece-why-such-different-results-from-imf-programmes/

Iceland vs Greece: Why such different results from IMF programmes?

Greece has a weak economy.

When you compare how IMF deals with countries with how US states have dealt with local govts you can understand IMF's shortcoming. US states have longer history dealing with local financial crises than IMF has dealth with countries.

You can contrast India with Pakistan. India basically used a nehru era legacy IIT's to c reate burdget surplus by exporting IIT grads to Emnglish speaking country- mostly to US. The timing was right as US was moving to greater use of IT.

Pakistan's case cannot be solved by financial engineering. It needs to change its economy. Right now farmers do not pay TAX!!!! It companies are not oriented towards exports.

On Tuesday, March 7, 2023 at 10:31:38 PM GMT+5, Chas Freeman via Salon <salon@listserve.com> wrote:

https://www.bloomberg.com/news/newsletters/2023-03-07/pakistan-s-dystopian-warning-to-the-world?cmpid=BBD030723_politics

Pakistan’s Dystopian Warning to the World

Supporters of former Prime Minister Imran Khan at a rally in Rawalpindi in November.

Photographer: Asad Zaidi/Bloomberg

Alan Crawford

March 7, 2023

Pakistan has touted itself as one of the world’s cradles of civilization, flourishing for thousands of years along ancient trade routes passing through the fertile Indus Valley.

Now it presents a dystopian vision of the future, bankrupt, unstable and threatened by climate catastrophe. Its fate offers a warning to other heavily indebted nations on the precipice, from Sri Lanka to Zambia.

Key reading:

Pakistan is due to hold elections no later than October, and political jostling is narrowing the nuclear-armed nation’s options.

Opposition leader Imran Khan, who was ousted from the premiership last year, is in a bitter standoff with Prime Minister Shehbaz Sharif over control of the country of 230 million. He’s held mass rallies in recent months to pressure the government into an early vote, while the authorities have filed numerous cases against him and issued a warrant for his arrest.

As Islamabad fiddles, the country is burning up its foreign reserves, and investors see a growing risk of default. The government is living hand to mouth, reliant on outside loans from China while negotiating with the International Monetary Fund for the remaining funds in a $6.5 billion bailout — its 13th since the late 1980s.

Pakistan already got a taste of economic disaster last year when deadly floods displaced millions. Such calamities are unlikely to be a one-off, with climate scientists forecasting massive increases in river flows as a result of melting Himalayan glaciers, inundating farmland and obliterating infrastructure — interspersed with drought.

Pakistan could hardly have a more strategic location, lodged between Iran and India and with China and Afghanistan to the north. That, plus its sheer size as the world’s fifth-most populous nation, make it too big to be allowed to fail.

The question is who, both in and outside the country, is going to come to its rescue.

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Pakistan’s Dystopian Warning to the World