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Prepared and presented by : Javeria Rashid (9937) Anum Tariq (10143) 11653

IMF and Pakistan

International Monetary Fund ( IMF) is an international organization that works to stabilize exchange rates and assist the reconstruction of the worlds international payment system. It came into existence on 27th December 1945 with 29 countries as its members. Current number of member countries is 187.

IMF carries out its operations by receiving money from countries to form a pool.

From this pool countries with payment imbalances can borrow on a temporary basis.
IMF describes itself as an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty.

Pakistans History with IMF

Pakistan became a member of the IMF in 1950.

Received its first loan program in 1958.

A total of 12 programs have been received by Pakistan. During the period, 2000-2010 Pakistan has repaid $45.6 billion. Despite of this the debt has increased by $ 20 billion.

Details Of Loans
The 12 loan programs that Pakistan received included the following types: I. Stanby Arrangement (SBA) II. Structural Adjustment Programs (SAP) III. Poverty Reduction and Growth Facility (PRGF) IV. Extended Fund Facility (EFF) V. Extended SAP VI. Compensatory Contingency Finance Facility (CCFF)
The mechanism of giving out loans by the IMF is that it links to some conditionality rather than seeking collateral from countries.

The major setback of IMF loans are the stringent conditionality.
For example: I. Taxation on Agriculture II. Removal of subsidy in petroleum III.Price hike in utilities IV. Imposition of VAT V. Tight monetary policy VI. Limit SBPs financing of the budget

Criticism Against IMF

IMF has been criticized of being immensely manipulated by the United States as it is their major donor. IMF has been accused of supporting military dictatorship. Increase in the number of conditionality. In 1988 the number of conditions laid out to Pakistan were 4 and by 2000 they had become 35. Overoptimistic projections. It has been blamed to create situations where countries have ended up in a vicious debt cycle more loan more interest, more interest more loan. Conditionality undermines domestic political institutions. Over-imposing.

The World Bank is one of the worlds largest sources of funding and knowledge to support governments of member countries in their efforts to invest in schools and health centers, provide water and electricity, fight disease and protect the environment.

A Bank owned by 184 countries The financial support and advice the World Bank provides its member countries is designed to help them fight poverty unlike commercial banks, the World Bank often lends at little or no interest to countries that are unable to raise money for development anywhere else

It has a good credit because it has large, well-managed financial reserves. This means that it can borrow money at low interest rates from capital markets all over the world and channel it to developing countries, at lower interest rates.

People sometimes confuse the World Bank with the International Monetary Fund (IMF). Although the IMFs functions complement those of the World Bank, it is a totally separate organization. While the World Bank provides support to developing countries, the IMF aims to stabilize the international monetary system and monitors the worlds currencies.

World Bank offers 2 basic types of loans: 1. Investment loans for goods, work and services to support economic and social development projects in a broad range of sectors 2. Adjustment loans to support policy and institutional reforms World Bank supervises how each loan is used and evaluate the results. All loans are governed by operational policies, which make sure that operations are economically, financially, socially and environmentally sound.

Supporting reforms at both the federal and provincial level

The Federal and Provincial Governments aim to encourage growth, investment, and employment generation. Reforms at the provincial level aims to provide education, health, clean drinking water, and sanitation. In June 2007, the World Bank approved a US$350 million credit to support ongoing implementation of the Government's Poverty Reduction Strategy. At the provincial level, the Bank approved operations worth US$430 million for Punjab, Sindh and the North West Frontier Province to help improve irrigation, education and human development etc.

Working with Pakistan Poverty Alleviation Fund to bring difference in the lives of poor.

The World Bank funded Pakistan Poverty Alleviation Fund Project (PPAF), designed to reduce poverty and empower the rural and urban poor in Pakistan. Includes providing the poor with micro-credit loans; grants for small scale infrastructure projects; training and skill development and social sector interventions. The program is impacting over 10 million people and has mobilized over 66,000 community organizations (COs) in 27,000 localities across 111 districts in the country. PPAF has issued 1.5 million micro-credit loans, (average loan-size US$ 150), benefiting nearly 9 million people.

Helping the victims of the Earthquake. To help the victims of Earthquake of 2005, government created the Earthquake Relief and Reconstruction Authority (ERRA) and launched an ambitious US$1.5 billion owner-driven rebuilding program - largely suited to the mainly rural affected population. Under ERRAs Rural Housing and Reconstruction Program (RHRP), partially funded by the World Bank, homeowners are given around US$3,000 in installments to build quake-resistant homes - with routine visits by inspection teams to ensure compliance to agreed seismic-resistant standards.

Working with the government to improve education outcomes.

The World Bank is providing assistance to the Government of Pakistan in education reforms, at both the national and the provincial level. The programs target increasing participation of girls and children from poorer household through interventions such as student stipends and conditional grant systems and by working in partnership with the private sector to provide access to low cost quality education. The World Bank is also assisting the government in improving the quality and relevance of its higher education and technical and vocational training system.

Joining with international partners to help Pakistan fight polio The World Bank has approved 2 projects; of US$42.71 million in 2003 and of US $ 74.27 million in 2006 for Pakistan to purchase the oral polio vaccine. The money is part of an innovative financing partnership (IDA Buy-down) between the World Bank, the Bill & Melinda Gates Foundation, Rotary International, and the United Nations Foundation. Since 1997 the number of polio cases has decreased from 1147 to 31 in 2007. Based on an independent third party assessment, the first credit (US$ 42.71 million) has been converted into a grant and written off for the Government of Pakistan.

Focusing on un-served and underserved low-income communities In NWFP and AJK, World Bank projects are supporting delivery of cost effective and sustainable community development schemes. The role and capabilities of local governments at the district and lower levels have been strengthened to extend technical, financial, and management support to Community-Based Organizations (CBOs). CBO are being mobilized and their capacity is being enhanced to increase their participation in development activities. Governance, transparency, and accountability are being more effective through improvements in operational, monitoring and evaluation, and financial and budgetary procedures for project implementation.

Helping Pakistan prevent the spread of HIV/AIDS The key challenge facing the country is to expand and improve quality of HIV preventive services to vulnerable groups that are most at risk of contracting and transmitting the disease. The Bank is supporting the Government efforts to control AIDS through the HIV/AIDS Prevention Project designed to prevent the disease from becoming established in these populations, while at the same time working to protect these groups from stigmatization. The World Bank is also organizing a region wide Development Market place in South Asia Region on Tackling HIV AND AIDS Stigma and Discrimination

Helping to improve trade flows and lower transit costs and times.
In 2005, the Government of Pakistan launched major initiatives around the National Trade Corridor Improvement Program (NTCIP) to reduce the cost of trade and transport logistics and bring services' quality to international standards in order to reduce the cost of doing business in Pakistan and ultimately enhance competitiveness and industrialization.

Knowledge Bank. With operations in more than 180 member countries, World bank is uniquely positioned to share international best practice and provide world class analytical and research services to their clients. Their advisory work includes a number of Pakistan specific reports e.g. Pakistans Country Water Resource Assistance Strategy, Pakistan Higher Education Policy Note, Pakistan Promoting Rural Growth and Poverty Reduction, Growth and Export Competitiveness, Pakistan Strategic Country Environment Assessment and Provincial Economic reports.