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You’re not a slave, don’t follow IMF, WB: US economist to Pakistan

Top US Economist Arthur B Laffer advised Pakistan to refrain from listening to the International Monetary Fund (IMF) and the World Bank (WB) for economic growth. He also gave suggestions for uplifting Pakistan's economy, which were in stark contrast to IMF's demands.

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Top US Economist Arthur B Laffer advised Pakistan to refrain from listening to the International Monetary Fund (IMF) and the World Bank (WB) for economic growth. He made the comments during a keynote address on Pakistan Prosperity Forum 2021 organized by PRIME in Islamabad.

According to the US Economist, there are six ways to bring economic prosperity to Pakistan; introducing low rates with a broad-based taxation system; rationalizing government spending; strong currency; minimizing regulatory requirement; ensuring free trade, and going ahead with privatization to get rid of running state-owned enterprises by doling out national exchequer.

Interestingly, Arthur B Laffer’s suggestions strongly go against the IMF. Important to note, Pakistan’s Advisor to the PM on finance, Shaukat Tarin earlier stated that the country needs to fulfill five demands of the IMF before the lender agrees to resume its $6 billion Extended Fund Facility.

Read more: Pakistan’s economy moving towards growth?

To fulfill the demands of the IMF, Pakistan needs to hike electricity tariffs and withdraw tax exemptions. Furthermore, IMF’s demands require Pakistan to increase the monetary policy and adjust the interest rate. Such actions can further devalue the rupee.

You are not a slave to them: Arthur B Laffer

In contrast to IMF’s demands, Arthur B Laffer argued that the devaluation of Pak currency on the advice of multilateral donors resulted in hiking inflationary pressures, so the currency should be pegged with the dollar.

A fixed currency would ensure predictability on the economic horizon of the country. Secondly, he said that there was a need for free trade as tariff distortions would always create stumbling blocks to promote trade. He said that free trade ensures a win-win situation for all stakeholders. He said that the low rates but broadening of tax base always helped the country to grow more at a faster pace.

Arthur B Laffer also highlighted the importance of giving incentives to the people. According to him, government regulations and taxes are hurdles in the path of incentives.

“Don’t let the IMF/WB dictate you because you are not a slave to them,” Dr. Arthur Laffer said.

 

 

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