It would be, therefore, highly instructive to recall the data of a study (Do IMF Programmes Discipline Budget Deficit?-The Effects of IMF Programmes on Government Budget Balance, Expenditure, and Revenue by noted political scientist and economist Hye Jee Cho) about 93 developing countries with a view to articulating a plausible argument on these lines. This study covers the 1951-2000 period. The data collated by her successfully proves that IMF programs are effective in reducing government expenditure but fail to increase revenue collections. In other words, Fund's programs do not help contain overall fiscal deficits.
It is, however, quite interesting to note that the IMF has failed to help reduce government expenditures insofar as Pakistan is concerned. The Economic Survey of Pakistan (2014-15), for example, endorses, albeit reluctantly, this fact: "[F]iscal data indicates that the government was able to contain its deficit due to low growth in expenditure". It means that not only has the government failed to meet the fiscal deficit target, it has also remained unsuccessful in reducing government expenditure, although finance minister in his budget speech has tried to put a positive spin on this negative outcome by averring, "the government expenditure in real terms is actually contracting instead of expanding".
That the IMF has an increased role in every debtor country's economy or policymaking is a grim reality. Since 2012, it has expanded its mandate to exerting its influence on a country's macroeconomic and financial sector issues that, according to it, "bear on global stability". Prior to 2012, the Fund had generally and ritualistically contained itself to "ensuring the stability of the international monetary system". That the countries under the current IMF programs have, therefore, lost their economic sovereignty is an argument that has gained a new-found legitimacy because of Fund's unprecedentedly increased influence in a central government's budget balance, expenditure and revenue. There could have been two or even a host of opinions about a country's economic independence or autonomy under an IMF program prior to 2012 as the Fund then declared "the system of exchange rates and international payments that enables countries (and their citizens) to transact with each other" as its primary or principal responsibility. It is now an established fact that the Fund has a hand in every debtor country's economic outcomes. It will be, therefore, praised and criticized in equal measure for Nawaz Sharif government's achievements and failures in the spheres of economy.
One of the formidable challenges facing Pakistan's economy is low revenue collection. The same study, perhaps, gives an answer, albeit partially, to this problem. According to it, "two major factors influencing the level of the efficiency of the tax system in a country are variables that account for the sectoral composition of GDP and urbanization. The larger the relative size of agriculture sector in economy, the higher the cost of administration and enforcement of tax collection. This implies a less efficient system, thus leading to a budget deficit for a given level of government expenditures".
In the initial decades of the country's history, the size or contribution of agriculture sector in the country's economy was much bigger than what it is today. For example, 80 percent of Punjab constituted "rural Punjab" while the rest of the province was considered urban or quasi-urban. In 2015, it is a vastly different situation as over 50 percent of the present-day Punjab could be safely described as "urbanized areas" strongly characterized by the presence of industry and trade. However, the tax to GDP ratio, which is one of the lowest in the world and the lowest in the region, continues to cause an adverse impact on country's economic strategies, although the size of agriculture sector has reduced to less than 25 percent from once over 60 percent of GDP. Regardless of the size of agriculture and the concomitant costs of administration and collection, the governments have consistently failed to generate any significant direct revenues from agriculture producers. An IMF policy paper "Taxing agriculture in Pakistan" by Mahmood H. Khan and Mohsin S Khan in 1998 successfully presented some outlines of a full-fledged agriculture tax that, according to them, could be implemented within the constitutional framework of Pakistan by 2001. These remained unimplemented mainly because of a principal hurdle in its way. The IMF itself had identified that formidable obstacle in the introduction to its report before it undertook the exercise of suggesting tax reforms: "The Federal Government cannot directly impose taxes on agriculture incomes or lands. The political power of large landowners has prevented the Federal government from seeking such a change in the Constitution, as well as constrained the Provincial Governments from utilizing their legal authority to impose taxes on agriculture incomes".
The foregoing gives birth to a question: Why has the Fund failed to coerce subsequent governments from taking this path towards expanding the tax base given the fact that it, under its updated mandate, can deal with all macroeconomic and financial sector issues of a debtor country? There could be some questions with regard to country's revenue collection and export targets as well. Since the IMF program is only stabilization- specific arrangement or deal one must not therefore nurse high hopes of recovery so long the country is operating under its stipulations. The country is like a patient who is seemingly in a stable condition in a hospital but far from attaining recovery. His condition allows him to undertake no physical rigors of daily life for he has not recovered yet; but he is always required to show no complacency towards issuing cheques to pay off his debt that he owes to the healthcare facility that has helped stabilize his condition.