September 26, 2023

By Hamza Saeed


In a recent report by Human Rights Watch (HRW), the International Monetary Fund (IMF) is under scrutiny for its policies that allegedly undermine human rights and inadequately address social spending during the COVID-19 pandemic. The report, titled “Bandage for a Bullet Wound: IMF Social Spending Floors and the COVID-19 Pandemic,” provides an in-depth analysis of the IMF’s influence on social spending and its impact on various countries grappling with the economic fallout of the global health crisis. Concerns have been raised by various stakeholders, including Human Rights Watch (HRW), about the impact of these policies on vulnerable populations.


The Situation in Pakistan:

In Pakistan, the IMF’s policies have significantly impacted the economic landscape,  contributing to a deepening crisis. The country, already grappling with historical and structural economic challenges, has seen a recent spike in inflation, a notable increase in electricity and fuel prices, and a depreciation in its currency. These economic shifts are according to HRW a direct result of a $3 billion deal made between the IMF and Pakistan in July 2022.

The deal mandated the Pakistani government to end energy and fuel subsidies, increase taxes, and transition to a market-based exchange rate. While these measures were intended to stabilize the country’s economy, they have inadvertently placed an additional burden on the Pakistani populace, particularly those already in vulnerable economic positions. The end of subsidies has led to soaring electricity and fuel prices, making it difficult for many families to afford basic utilities.


IMF’s Stance and Criticism

The IMF, in a message from its Managing Director Kristalina Georgieva, urged Pakistan to collect more taxes from the wealthy and protect the poor.

However, critics argue that the IMF’s conditions, including ending energy and fuel subsidies and increasing taxes, place the burden of economic recovery on those already struggling the most.

The HRW report found that the majority of recent IMF loans worldwide are conditioned on austerity policies likely to harm human rights, exacerbate poverty and inequality, and undermine economic recovery.


Ineffectiveness of Austerity Measures

The IMF’s internal research, as cited in the report, indicates that fiscal consolidations, usually linked to austerity programs, do not effectively reduce debt ratios. Human Rights Watch’s analysis of IMF programs approved to 38 countries since March 2020 finds that over half of the IMF programs approved to 38 countries since March 2020 contain or reduce spending on public wages and impose value-added taxes, exacerbating inequalities and compromising the delivery of quality public services guaranteed as rights.


Impact on Social Security and Human Rights

The removal or reduction of consumption-based fuel or electricity subsidies, without adequate investment in social security or other compensatory measures, disproportionately affects those on low incomes.

The IMF’s reliance on small improvements to cash transfer programs, such as the Benazir Income Support Program in Pakistan, is deemed insufficient to address the broader issues of income insecurity and human rights violations.

The HRW report calls for the IMF to change course and prioritize people’s economic and social rights in their programs. The right to social security, enshrined in various treaties ratified by countries like Pakistan, plays a crucial role in realizing other rights, including education, food, healthcare, and housing. The IMF’s policies, as they stand, risk undermining these rights and exacerbating the challenges faced by vulnerable populations worldwide.


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