Pak-IMF relationship is quite a phenomenon that never fails to evoke controversy. Interestingly, the resentment against the relationship usually emerges from Pakistan as throughout this association the IMF has remained tight-lipped.
As an international financial agency, the IMF is expected to maintain a professional distance, which it has done. However, there have been instances where the IMF has expressed its assessment of Pakistan’s economy through objective analysis, which have unfortunately turned negative despite initial optimism. Pakistan, as a member of the IMF, has repeatedly fallen back after receiving much-needed financial assistance. Despite facing criticism, the IMF has remained patient and continued to financially support Pakistan.
The relationship between Pakistan and the IMF has spanned decades, and it is evident that both parties are exhausted and locked in an almost eternal bond.
The recent delay in the IMF’s review of the financial assistance program for Pakistan indicates a waning patience on the part of the IMF. This has led to the imposition of stringent conditions that will further burden the already distressed people of Pakistan.
Pakistan has made extensive efforts to persuade the IMF to ease its restrictions, but unfortunately, these attempts have been unsuccessful. This firm stance taken by the IMF is concerning for the country. What is even more alarming is that nearly all of the financial sources that Pakistan has relied on in the past have now aligned themselves with the IMF, indicating that Pakistan’s economy, which is heavily reliant on loans, may be reaching a dead end.
The financial troubles for Pakistan began to worsen in 1958, leading the country to seek financial assistance from the IMF. Initially, Pakistan requested $25 million in 1958, followed by additional requests of $37.5 million in 1969, $75 million, and a total draw-down of $112 million during Ayub Khan’s government.
Since then, Pakistan has repeatedly turned to the IMF, seeking assistance a total of thirty-four times. Unfortunately, each time Pakistan sought help from the IMF, it failed to address the underlying structural issues within its economic system, resulting in continued economic instability. There were brief periods of respite when the United States provided financial assistance between 2001 and 2008. However, Pakistan was unable to capitalize on this temporary advantage and eventually returned to the IMF, ultimately negotiating the largest loan ever of $7.3 billion.
The dire economic situation in Pakistan has caused the country to exceed the IMF’s quota for it by 210 percent. The IMF justifies this leniency by stating that it aims to support Pakistan’s policies in order to bolster the economy, protect lives and livelihoods, and establish a foundation for sustainable and inclusive growth that benefits all Pakistanis. However, despite these efforts, Pakistan has failed to achieve any semblance of economic independence. In fact, an IMF assessment describes Pakistan as a long-term borrower, raising questions about the IMF’s generosity in granting waivers to Pakistan despite its noncompliance with conditions. This assessment also highlights that until 1998, there was a prevailing perception among IMF staff regarding Pakistan’s situation.
