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Impact of IMF Conditionality on Pakistan

Iqbal, Tabassum and Hussain, Asad (2020): Impact of IMF Conditionality on Pakistan.

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Abstract

International Monetary Fund (IMF) is a multilateral financial institution which provides financial assistance to countries facing financial challenges. The increasing influence of IMF through Standby Arrangements and Structural Adjustment Programs and their performances in under developed countries has made it a subject of intense global debate with significant concerns about the effectiveness of IMF program conditionality on borrower countries. This study examines the impact of International Monetary Fund (IMF) program conditionality on Pakistan’s economy. Pakistan makes an interesting case study as it is one of the most prolonged users of IMF resources. This study uses a 50 year review period from (Fiscal Year) FY1970 to FY2020 and concludes that IMF programs had insignificant impact of major macroeconomic variables but considerable impact in reforming the country’s financial system, trade liberalization, privatization and deregulation. However, it failed to improve the country’s fiscal position while also being unhelpful in achieving sustainable external account and higher GDP growth rate. The program implementation was generally weaker during the periods of civilian-rule in the country and relatively better when the military was in charge.

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