The Washington-based global lender had earlier promised US$500 million development-support credit (DSC) three years back for budgetary support linked to some reform to the economy. But it did nothing over this period to carry out the reforms and now wants to postpone them for next two years again on election ground.
It is natural that the government has its own worries not to press for drastic reforms in banking and financial sectors and such other areas; which will hurt organized lobbies risking its support base. But how can it be justified that the economy will continue to bleed from mismanagement to ask taxpayers and common people to bear the load of waste and corruption at every level of the government.
The WB credit was linked to specific reforms such as automated fuel-price adjustment, implementation of the VAT law, enactment of public-private partnership (PPP) law, corporatisation of some poorly performing power-distribution companies and strengthening power distribution network. Its pressure to free interest rate on saving certificates to market forces without artificially holding it high to benefit privileged groups, is also quite right.
But the government is apparently avoiding the reforms; which could otherwise reduce overall levels of inefficiency and sectoral mismanagement to reduce budgetary mismatch. However by not implementing them the government is sheltering misuse of national resources much of it being stolen by corrupt people and powerful lobbies as they resists such reforms. The government is increasing the price of gas, electricity and water and such other services to frequently to cover deficits but not disciplining those sectors.
The WB is quite right to insist on such changes for the loan. We may bargain if there is any unjust condition. But just because it is politically not expedient to go for such reforms does not mean that they don’t have to be done.
