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3 views

IMF and Pakistan

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kunbherparas
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Maktab Competitive Exams Services

Current Affairs Workshop for CSS 2024


Instructor: Arslan Zahid Khan (CSP - 51st Common)

IMF and Pakistan’s Economy


Facts and Figures on Pakistan’s Economy:
1. The GDP growth is 0.29% in 2023 compared with 6 percent in 2022
2. 25% decline in Foreign Direct Investments in 2023
3. Human development Indicator 2023 Ranking 161
4. Ease of Doing Business Ranking 108th 2023
5. 26.9 % CPI and 43% SPI
6. Per capita income stood at US$1,568 as compared to US$ 1,765 last year
7. The industrial sector posted a negative growth of 2.94% in FY2023
8. The growth of agriculture sector estimated at 1.55%
9. Pakistan’s 70% economy is informal
Economic Challenges behind poor economic indicators:
1. Fiscal Imbalances: Fiscal Deficit, Poor taxation, Fiscal Centralization
2. Inconsistent Economic Policy Mechanism
3. Import Oriented Economy and Balance of Payment Crisis
4. Pakistan’s development paradox
5. Pakistan Legislative dilemma – 18th amendment and NFC
6. Volatile Regional economics
7. Fragile domestic sectors and State owned Enterprises
8. IMF induced economic fragility
IMF and Pakistan
Structural Adjustment Programs:
SAPs are comprehensive and longer-term economic reform programs aimed at
addressing fundamental structural issues within a country's economy. These programs
are generally more extensive and cover a broader range of economic policies than
standby arrangements. SAPs are longer-term programs that may span several years.
Encompass a wide range of structural reforms, including macroeconomic policies, trade
liberalization, privatization, and institutional changes.
Stand By Arrangements:
These are short to medium-term financial assistance programs provided by the IMF to
member countries facing balance of payments problems. Standby arrangements are
designed to help countries stabilize their economies by addressing short-term issues such
as fiscal imbalances, external deficits, and other macroeconomic challenges. These are
relatively short-term programs, typically lasting for a period of one to two years. Focus on
short-term policy adjustments and measures to stabilize the economy. These may include
fiscal and monetary policy changes to address immediate imbalances.
Chronological Time line of IMF and Pakistan Relations:
1. 1958 – Early economic problems
2. 1965 – War torn Economy
3. 1968 – Post war economic fragility – Ayub Dilemma
4. 1971 – East Pakistan debacle
5. 1972 – Post war Period
6. 1973 – New constitution
7. 1974 – Economic problems due to Nationalization
8. 1977 – Weak economy due to poor economic policies of Bhutto
9. 1980 – War torn economy
10. 1981 – War torn economy
11. 1988 – Benazir Reforms and revival of democracy
12. 1990 – Era of Troika
13. 1993 – Era of Troika
14. 1994 – Era of Troika
15. 1995 – Era of Troika
16. 1997 – Era of Troika
17. 2000 – Revival of Musharaf’s Martial Law
18. 2001 – War Torn Economy
19. 2008 – Energy Crisis
20. 2013 – Terrorism and Energy Crisis
21. 2018 – Economic Restructuring
22. 2019 – Economic Restructuring
23. 2023- Escaping Bankruptcy
Why IMF bailout Packages did not Yield Positive Outcomes?
1. One size fits all approach: Critics argue that the IMF often applies a standardized
set of policy prescriptions to diverse economies without considering the specific
circumstances of individual countries. This one-size-fits-all approach may not
address the unique challenges and needs of each nation.
2. Austerity Measures: Many IMF programs require implementing austerity
measures, such as cutting government spending and reducing budget deficits.
While these measures aim to restore fiscal discipline, they can also lead to social
and economic hardships, including job losses, reduced public services, and
increased poverty, particularly affecting vulnerable populations.
3. Import Liberalization: IMF programs often advocate for rapid economic
liberalization, including trade and financial sector reforms. Critics argue that
implementing these measures too quickly can lead to economic instability, loss of
domestic industries, and increased vulnerability to external shocks.
4. Removal of Energy Subsidy: It leads to hike in energy prices and it not only
exacerbate inflationary trends but also make the domestic industry incompetent in
International markets
5. Increase in taxation: particularly indirect taxes causes skyrocketing inflation
6. Privatization of public entities: it results in to censure and abhorrence from the
general masses relevant to job security concerns
Structural Economic Reforms to get rid of IMF and bring Economic Prosperity
1. Reforms in FBR to collect taxes efficiently
2. Strong Local Government system to collect taxes
3. Tools of Digitization to get rid of Informal Economy
4. Academia Industry Linkages to beef up employment opportunities
5. Public Private Partnership Projects
6. Work on Tourism Sector
7. Emphasis on SIFC and Successful Execution of CPEC projects

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