PAKISTAN’S EXPERIENCE WITH THE IMF

Abstract

From the view point of the International Monetary Fund (IMF), whenever a country faces
balance of payments crisis it is because of the excessive demand prevailing in the economy.
Pakistan faced a serious balance of payments crisis by the end of 2017-18. It has now
decided to go to the IMF for the balance of payments support. IMF uses three key
instruments to correct balance of payments crisis. These instruments include tight
monetary policy, tight fiscal policy and market determined exchange rate policy. These
policies are part of the Stabilization policy. Pakistan has gone to the IMF 21st time in the
past and fourth time since the year 2000. It has been observed from the past experiences
that IMF Program is not a stabilization program, rather it is a destabilization program in
which investment and growth slowed leading to the rise in unemployment which gives
birth to social unrest in the country. It also increases the country’s debt and as such the
country never gets out of the clutches of the IMF Program. Pakistan is now entering 22nd
time into the IMF Program. Same medicine will be applied. Will the result be different this
time?