IMF and Pakistan

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The International Monetary Fund (IMF) assured Pakistan that it would continue its support “once the new government is formed.” In a tweet, the Finance Ministry said that Finance Division and IMF remained engaged in data sharing and reform discussions as part of EFF. “There is no truth to speculation about the suspension of the program. IMF has confirmed the same and also clarified that it remains committed to Pakistan’s macroeconomic stability”. IMF also indicates that the seventh review has ended and the three-year Extended Fund Facility (EFF) has been put on hold for the third time since it began in 2019. In May 2019, Pakistan and the IMF reached a staff-level agreement on economic policies for a three-year Extended Fund Facility (EFF). Under the agreement, Pakistan was to receive about $6 billion for a period of 39 months, and so far, it has received almost half of it. The relationship between Pakistan and the IMF is not new, both are engaged since the 1950s. The country has been signing lending agreements with the IMF for so long, however, successful loan management and repayment are still inadequate. In Pakistan, it has now become a custom that every successive government declares economic bankruptcy and starts a blame game against the economic policies of the previous governments. This is the very reason that every new government that comes to power moves towards IMF, World Bank, Asian development bank, and other developed states for bailout packages. During the time of economic crisis and international fiscal debts, IMF granted loans to the state. However, there is no free lunch in this world so the organization also seeks a robust action plan to deal with the crisis and demand for repayment under certain imposed conditions. Therefore, the complete dependence on loans and lending institutions has never been a harmless solution to a nation’s problems. The repayment of loans and complying with the conditions imposed by lenders is not a piece of cake. The delay in repayment entombed the states in IMF’s debt trap and the Same is the case with Pakistan.

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