Abstract
The paper attempts to analyze the impact of the economics of austerity in the form of structural
adjustment programmes singed by government with IMF during 1988-2002. To assess the
impact of SAP on the vital macroeconomic indicators, the paper has adopted qualitative and
quantitative research methodology while collecting data from different sources, including
State Bank of Pakistan. This paper assesses the social impact of IMF conditionalities on
health, education in addition to social consequences of privatization and withdrawal of
subsidy. It has been deduced from the data that there has been major reduction on the
expenditure on health and education as a result of cuts on healthcare and education as certain
portions of the budget such as the defense, debt servicing and government salaries are fixed
and the cut in the budget translates into cut in social sector expenditure which eventually
impacted on health, education and other relevant sectors of the economy. This had have
negative implications for the quality of services provided in education, curative health care
and provision of medicines, largely due to protecting recurring budgets in the face of cutbacks.
Education is an important sector of economy since it is a key component of the strategy for
sustainable development and the best way to build a modern and coherent community. Cuts
in educational expenditures had worst consequences for both the quality and quantity of
education provided to students. Governments in the past had reacted by reducing education
budget which resulted in decline in real education expenditure per student. Hence cut in
education expenditure affects both the quality and quantity of education provided to the
population by any government and can be linked directly to structural adjustment programs.
The other area that produced negative social consequences during adjustment period is the
privatization. Though IMF saw privatization as panacea to the economic woes of Pakistan,
it failed to produce the desired results. From 1991 to 2006 the GOP privatized more than
160 public units at gross price of Rs. 395 billion and about 0.6 million workers were rendered
jobless as a result of neo-liberal IMF (SAP) policies.
Dr. Manzoor Ali Isran, Dr. Samina Isran. (2014) Economics of Austerity and Its Social Cost: A Critical Assessment of IMF Policies in Pakistan from 1988-2002, Journal of Independent Studies and Research-Management, Social Sciences and Economics, Volume-12, Issue-1.
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