The IMF & Pakistan- who’s pulling the puppet’s strings?

Written by Iman Saqib and Hamza Javaid

The IMF has yet again premeditated another consultation on 12th January 2022 with Pakistan and its schedule comprises-2021 Article IV Consultation and to overlook and discuss the sixth review of the EFF (Extended Fund Facility) worth $6 billion.

It’s been a tough time for the state besieged with the amendments the IMF has brought on lately. With rise in tariffs, removal of energy subsidiaries and increase in taxes alongside the present rate of inflation, it seems making ends meet is difficult for the common public.

The existing administration of PTI is only trying to carry things forward and fix the effect our preceding leaders have left. It’s not a lie that things have only deteriorated with time economically for Pakistan. Perhaps the reason for this is the fact that there indeed were limitations in ordinary resources, cheap labour and more. Pointing fingers to just one element won’t do it.

Ever since the current administration has come in power, there has been a specific highlight on the past currency depreciation, the ongoing inflation levels and account shortages that seem to be only going further down. In times like these, it was only reasonable that PM Imran khan swallowed his words and took a loan from the IMF.

The Pakistani administration had to negotiate to for the release of a $1billion loan that was postponed out of a bailout package, from the IMF to fix the rampant economic crisis much to the uproar of the common public.
This has not been the first time that the administration of Pakistan took a loan from the IMF. The first time being in 1958 and the last time Pakistan took to seeking aid before 2019 was in 2013 during then PM Nawaz Sharif’s tenure. So why is that things are so different now when the PTI administration decided to do the same as those before them?

A standstill came to the funding that the IMF agreed to in 2019 when PM Imran Khan refused to settle to the terms that were put by them during them right before the pandemic came to a surge. There of course then came financial aid in different forms for the administration causing our economic managers to ease. The results? Complete havoc post first pandemic surge.

By the time the damage was done and the economy crippled further, Pakistan realized it must now make compensations and listen to the state of affairs of the IMF if they wanted to see economic progress. This time, however, the IMF pulled the strings and came with even more tougher circumstances. The Pakistani administration had no other option but to agree. All this came with handing over the independence of the central bank and added taxes of $700 billion.

Pakistan did offer to do this through a presidential decree which was rejected back then. Instead, they insisted that a mini-budget should be passed by a simple majority in the National Assembly.

The finance ministry of Pakistan eventually prepared what we now know as a mini-budget in line with IMF instructions that was to be presented in the national assembly after the approval of the federal cabinet.

Lately the Pakistani administration and the IMF reached a staff-level agreement on strategies and improvements that were needed to be completed in the sixth review under the $6 billion Extended Fund Facility (EFF) and issued a press statement on November 21, 2021.

And now comes the much awaited meeting on the 12th. What the future awaits seems to be a matter of a few days where we shall again see who will pull the strings. Nonetheless, it seems to be a tough time for PM Imran Khan and for the people of Pakistan.

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