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EDITORIAL, OPINION & COLUMN FPSC PPSC

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IMF and Pakistan – 18 November 2023
Editorial, Opinion, Column Link: https://tribune.com.pk/story/2446879/imf-and-pakistan

Statistical Data (used in editorial):

• Number of Restructuring Plans with IMF: 23
• Amount of Staff-Level Agreement on Bailout Package: $3 billion
• Current Account Deficit: Accumulates around $20 billion per annum
• Exports: $27 billion
• Interest Rate: 22%
• Proposed Exports Target for Economic Recovery: $100 billion
Summary:
1. Pakistan’s IMF Programmes:
• History of Pakistan’s restructuring plans with the IMF.
• Details about the recent nine-month bailout package.
• The country’s ongoing reliance on the IMF.
2. Pakistan’s Relationship with the IMF:
• Pakistan has had 23 restructuring plans with the IMF, and recently agreed to a nine-month
bailout package of $3 billion.
• The country’s reliance on the IMF is expected to continue due to its inability to sustain on its
own revenue resources.
• Caretaker Finance Minister Dr Shamshad Akhtar hinted at the need for more loan programmes
with the IMF as the economy remains fragile.
3. Economic Challenges:
• The need for more loan programmes due to the fragile economy.
• Postponement of new bonds launch due to high interest and costly market conditions.
4. Budgeting and Revenue Distribution Issues:
• Problems with the current budgeting structure.
• Misbalance in revenue distribution between the federation and the provinces.
• The Centre is left with almost no funds while the provinces end up with surplus in their
respective pools.
5. Interest Rates and Current Account Deficit:
• High interest rates and their impact on economic growth.
• The country’s current account deficit and its implications.
• The country faces a 22% interest rate and accumulates around $20 billion per annum in current
account deficit.
• With exports at $27 billion and remittances decreasing due to political instability, the overstress
on raising taxes is not yielding desired results.
6. Export and Taxation Concerns:
• The role of exports and remittances in the economy.
• The overstress on raising taxes and its effectiveness.
7. Potential Solutions for Economic Recovery:
• The importance of local entrepreneurship and export-oriented production.
• The need for regular tariff adjustments, gas price hikes, and market-determined exchange rates
• The inevitability of disinvesting some state-owned units.

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EDITORIAL, OPINION & COLUMN FPSC PPSC
SUMMARY Preparations

Panacea Institute CSS Multan for CSS PMS & All Competitive Exams 0300 80 70 666
Terms and Jargons (used in editorial):
• IMF (International Monetary Fund): An international financial institution that provides financial
assistance and advice to member countries facing economic difficulties.
• Restructuring Plans: Plans developed in collaboration with the IMF to address and reform a country's
economic structure and policies.
• Staff-Level Agreement: A preliminary agreement between a country and the IMF staff on the terms of a
financial arrangement, subject to approval by the IMF's Executive Board.
• Bailout Package: Financial assistance provided to a country in economic distress to prevent a financial
crisis.
• Revenue Resources: Income generated by a country through various sources, including taxes, exports,
and other revenue streams.
• Caretaker Finance Minister: An individual temporarily appointed to oversee financial matters during a
transitional period, often between governments.
• Loan Programmes: Agreements with international lenders, such as the IMF, to borrow funds to address
economic challenges.
• Budgeting Structure: The organization and allocation of financial resources within a country's budget.
• Lopsided: Imbalanced or uneven, indicating a lack of equilibrium.
• Misbalance: A situation where elements are not distributed evenly, leading to an imbalance.
• Interest Rate: The cost of borrowing money or the return on investment, often expressed as a
percentage.
• Current Account Deficit: The shortfall in a country's balance of payments when the value of imports
exceeds the value of exports.
• Trauma: A term used metaphorically to describe the distressing impact of a significant problem or
challenge.
• Exports: Goods and services produced domestically and sold to other countries.
• Remittances: Money sent by individuals working abroad to their home country, often a significant
source of income for some nations.
• Political Instability: Unstable or uncertain political conditions within a country.
• Tariff Adjustments: Changes in taxes or duties on imported and exported goods.
• Market-Determined Exchange Rate: The value of a country's currency determined by supply and
demand in the foreign exchange market.
• Salient Features: Prominent or important characteristics.
• Disinvesting: The process of selling or divesting assets, such as state-owned units, to raise funds or
improve efficiency.
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