International Monetary Fund (IMF) provides loans worldwide to financially weak countries in Asia as well as other continents. Pakistan borrows the loan on instalment plans each year and returns it with loan interest implemented by the IMF. The current credit outstanding is 6,689,541,671 according to a recently updated list of 29th November 2024.
The IMF has provided loans for financial stability for Pakistanis since 1950. At that time, it was only a way to get started with a loan because the government needed more budget and a tax system established as now. Every country can be financially stable when it has the right policy for tax collection, avoids extra costs, and manages its budget plan according to other factors.
For many years, Pakistan has collaborated with the IMF to maintain payment difficulties by borrowing loans, which have improved the country’s economy. The loan providers set conditions for borrowers to return the given target within the mentioned period. Reaching the target within the period has negative impacts on petroleum prices, food, and taxes.
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When the load provider sets tough conditions for a country, the inflation rises in the country and middle-class people do not survive in inflation. So from my point of view, the load is very helpful but when its policies are implemented the results are different as compared to before.
IMF and Pakistan Loan Details
Being an IMF member in 1950, Pakistan received 22 times loans from the IMF, the International Monetary Fund (IMF) knew the financial weakness of Pakistan and the country relies on imported things. The IMF provided a load of 314 million SRDPs to Pakistan when Shaheed Zulfiqar Ali Bhutto visited the IMF three times between 1972 and 1974.
| Year | Amount |
|---|---|
| 1988 | No data from any source. |
| 2001 – 2004 | 1.3 Billion US Dollar |
| 2008 | 7.6 Billion US Dollar |
| 2013 | 6.6 Billion US Dollar |
| 2016 | 6.1 Billion US Dollar |
| 2019 | 6 Billion US Dollar |
| 2020 | 1.4 Billion US Dollar |
| 2024 | 6.5 Billion US Dollar |
Pakistan took a loan from the IMF to stabilize the economy, it’s a difficult task for a government for a long time to save the future of the country. Pakistan also gets loan support from neighboring countries like China, Saudi Arabia, the United States of America and others.
When the US dollar increases in the international market it affects Pakistan’s economy and inflation increases in the country. US dollars highly increased in the past few years and it directly affected petrol, diesel, goods and other prices.
Every year, Pakistan needs new loans to manage the budget which can be equally distributed to each province. On the other hand, the IMF focuses on the privatisation of public sectors, especially the power, gas, utility and oil sectors. Recently, the government has cut off jobs and closed some public sectors as per directions issued by the IMF to comply with its policies.
Impacts of IMF Loan on Pakistan’s Economy
Looking at the policies of IMF loans, Pakistan borrows money from the IMF to pay salaries to government employees and pay bills to save the country from the financial crisis. The loan also financially helps Pakistan to invest in the development of roads, schools and other sectors.
On the other hand, the IMF loan increases the burden on Pakistan, because Pakistan has to return the loan to the IMF with interest, so it is very difficult to return it back with interest. The International Monetary Fund created some tough policies for Pakistan, forcing Pakistan to increase the taxes, and price of petroleum products, and goods so the target could be achieved easily.
To get a loan from the IMF, Pakistan does not have the ability to make its own financial decisions independently, because the IMF has already imposed its policies. In the recent instalment of IMF, has imposed difficult decisions on Pakistan to minimize the public sector, increase the tax and control black money.
Additionally, the Pakistan government shared views to close the some government departments which are financially burdens on government. Due to this decision, people come out from home protest to save the job. Another side, with the new budget plan the government brought new policies to do not allow the pension to retired employees.
Notably, the Federal Board of Revenue (FBR) has taken steps to collect the tax from business communities as well as focus on control of black money in the country. The government department, FBR is directed to collect the loan from the business communities as per taxation law and regulations.
The federal government department also investigates the taxes crime, and money laundering and collects the tax from individuals and business communities. It was established in 1924 under the title “Central Board of Revenue”.
Pakistan agrees every year to fulfil the IMF policies and ensure the implementation in the country, the IMF conditions are different for every new instalment and target to achieve it. In 2022, Pakistan was to default country if the IMF didn’t pay the instalment. At that time, the joint party government tried efforts to agree on the IMF for loan instalments which support the country in high inflation and help to manage the economic crisis.
To get financially freedom without IMF Loan is seems to be very difficult for Pakistan, when country’s economy drop and see significant drop in budget plan – the government knock the door of IMF to grant loan to complete the budget target. The budget divide province wise to grant them for its development and improve education, health, food, employees salaries.
If the government become default all employees and department will be shut down and the country marked as default country in the eyes of world.
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