Professional Documents
Culture Documents
IMF?
What will another International Monetary Fund loan
mean for Pakistan’s economy?
By Umair Jamal
October 02, 2018
This entire situation puts Pakistan’s financial stability in jeopardy. While a number of
countries have promised to help Pakistan financially, none of the international states
or monetary institutions are offering Pakistan funding without tough conditions.
While some states, including China, are open to giving Pakistan loans, they have
placed tough monetary or trade conditions in place that have over the last few years
put the country’s domestic industries at a disadvantage. A number of reports have
come out suggesting that Islamabad could have negotiated the China-Pakistan
Economic Corridor (CPEC) more effectively as currently Pakistan continues to take
money from Beijing, which has mostly gone to debt servicing. Recently, the Kingdom
of Saudi Arabia decided to join CPEC, and it has been reported that the country will
fund three major infrastructure schemes under the project. While it’s encouraging that
the Kingdom is joining the project, it is unclear what the new government in Pakistan
had to offer to Riyadh in terms of assurances that are expected to be in the realm of
military support. Other international creditors such as the IMF, the World Bank, and
the Asian Development Bank always include tough monitoring conditions before
offering necessary funds.
DIPLOMAT BRIEF
WEEKLY NEWSLETTER
N
Get briefed on the story of the week, and developing stories to watch across the Asia-
Pacific.
GET THE NEWSLETTER
However, while this may help the Imran Khan government in gaining the necessary
funds to keep Pakistan’s economy afloat for the next few years, any such measure is
not only going to offer the control of the country’s economy to international actors,
but will also increase the debt burden on Pakistan in the coming years. Pakistan
should be preparing to pay more debt — not only on previous debts, but also on
loans that the country is likely to negotiate with various international actors in the
coming weeks.
Enjoying this article? Click here to subscribe for full access. Just $5 a month.
This doesn’t bode well for Pakistan’s long-term economic viability as any such plan
cannot assist the country in becoming fiscally self-sufficient. Moreover, there doesn’t
appear to be an effort underway to support the country’s domestic industries in order
to increase Pakistan’s overall exports, which have fallen significantly over the last few
years. Pakistan may continue to take funds from international lenders, but any such
policy is not likely to help Pakistan stand on its own economically. The government in
Pakistan needs to take drastic measures in order to introduce major reforms in the
economic sector, which is essential to guarantee the country’s economic viability and
financial sovereignty.