Pakistan’s Experiences with IMF Programs, 1958-2021: Stagnation or Development?

Abstract

Pakistan is among the most regular clients of the International Monetary Fund (IMF). Currently too, Pakistan is part of an on-going IMF program which is suspended due to differences of opinions between Pakistani and IMF officials on policy actions. In addition, the trajectory of Pakistan’s key economic indicators after IMF programs over seven decades has been highly mixed. Overall, the main IMF conditions of currency depreciation, indirect tax, interest, utility and energy rate hikes and privatization have failed to deliver sustainable growth or even fiscal or external deficit reduction. There is little in IMF conditions focused on growth-inducing policies by increasing exports or foreign direct investment as IMF has no expertise in these areas. But then many analysts ask why global powers have created an entity to bail out developing states in crisis which specializes only in growth-reducing policies. Thus, IMF programs/conditions may look necessary from a narrow, short-term view as in their absence, states may face even greater pain. However, from a broader, long-term perspective, they clearly seem as a poor basis for ensuring sustainable growth in developing states, which requires structural changes in the global economic system.