By: Duaa Batool
Some critics argue that the governance structure of the IMF, which is dominated by a few major economies, grants those nations an excessive amount of power and can result in policies that favor the interests of powerful countries over those of borrowing countries. There are worries that nations that rely heavily on IMF assistance could lose their economic sovereignty by becoming trapped in a cycle of debt dependency and having to borrow repeatedly to meet their financial obligations.
IMF represents a neo-colonial effort to increase their influence in Pakistani affairs through economic means, evoking the colonial legacy of economic exploitation that exists today throughout the world. Pakistan and the IMF have a longer history together. The first agreement between Pakistan and the IMF dates back to 1958. As a newly independent state with a developing economy, Pakistan frequently had to turn to the IMF for financial assistance as it sought to develop.
Some people say that the IMF ends up putting developing and formerly colonized countries in a never-ending cycle of debt. They argue that these countries get stuck with loans that have conditions attached, which can harm their economies. Critics also say that the IMF is a tool that powerful countries in Europe and North America use to control the flow of money in their favor, often at the expense of poorer countries like Pakistan. This is seen as a reason for the economic inequality we see globally today. It’s a big debate about whether the IMF’s actions help or hurt countries like Pakistan.
The influence of IMF, poses a risk to a state’s sovereignty when it encroaches on the country’s ability to make independent decisions or when it compromises a nation’s self-determination. Critics argue that when Pakistan borrows from the IMF, it may need to implement policies that prioritize debt repayment over other national priorities. This can potentially limit the country’s economic sovereignty, as it may be forced to make decisions that benefit creditors over its own citizens
The government owes the IMF more than $7 billion as of right now. Imran Khan, the former prime minister, launched the current bailout program in 2019, following the completion of the previous bailout, which provided a loan of 6.6 billion spread over 36 months, in 2013. But since then, there have been numerous fruitless attempts to renegotiate the loan terms. The IMF now anticipates that in exchange for the bailout, the government will increase the cost of gas and electricity.
Today, Pakistan faces a daunting set of challenges and surrounded by enemies on all borders including regional conflicts, widespread political instability, and a struggling economy. What makes the situation even more complex is the influence of the IMF, with its own interests in Pakistan’s vulnerabilities. Neither an IMF bailout nor increased investments from Chinese government alone can rescue Pakistan from its economic woes. Instead, the nation must undertake substantial structural reforms to rectify the errors of previous governments.
Moreover, Improving Pakistan’s economy without relying on the International Monetary Fund requires a multi-faceted and well-thought-out approach. Pakistan can consider strengthening its economy by diversifying its economy, promoting exports, and investments in infrastructure, encouraging fiscal discipline, taking Anti-corruption measures, and attracting foreign investments.
The writer is a student of international relations and currently working in the SDGs department of the National Assembly Pakistan. She can be reached at duaabatool11@gmail.com