SINCE 1958, Pakistan’s relationship with the International Monetary Fund (IMF) has been central to its economic management during fiscal crises. Over the decades, Pakistan has engaged in various IMF programs, such as Standby Arrangements (SBA), Extended Fund Facilities (EFF) and Structural Adjustment Programs (SAP). This article provides a chronological overview of Pakistan’s borrowing history, highlighting key agreements, challenges and reforms.
1950s: First Engagement: Pakistan’s first IMF loan was a $25,000 SBA in 1958, marking the start of a long-term reliance on IMF assistance to address economic challenges in its early nation-building phase. 1960s: Modest Loans for Stability: In 1965, Pakistan secured an SBA of $37,500 to manage fiscal imbalances amid growing defense expenditures. By 1968, a $75,000 loan was arranged to stabilize the economy after the 1965 war with India. 1970s: Economic Turbulence: The 1970s saw significant upheaval, with the secession of East Pakistan in 1971, inflation and deficits. Pakistan arranged five SBAs during this decade, including $100,000 in 1972 and $80,000 in 1977, to manage crises such as the global oil price shock and economic instability.
1980s: Structural Reforms Begin: Economic issues deepened in the 1980s, leading to larger IMF programs. Pakistan signed its first Extended Fund Facility (EFF) in 1980 for $1.268 billion, followed by another in 1981 for $919 million, focusing on fiscal consolidation and trade liberalization. In 1988, a Structural Adjustment Facility (SAF) for $382.41 million was paired with a $273.15 million SBA, introducing stringent conditions like reducing fiscal deficits.
1990s: Increased Dependence on IMF: The 1990s brought persistent fiscal deficits and rising external debt. Pakistan signed an SBA for $265.4 million in 1993 and entered ECF and EFF programs in 1994 worth $606.6 million and $379.1 million, respectively, focusing on tax reforms and governance. In 1997, further agreements totalling over $1.1 billion were signed, but external debt and economic challenges persisted.
2000s: Crises and Major Programs: After economic sanctions following nuclear tests in 1998, Pakistan secured a $465 million SBA in 2000, followed by a $1.033 billion ECF in 2001. The 2008 global financial crisis prompted a $7.235 billion SBA to stabilize the economy through monetary tightening and fiscal reforms. 2010s: Large-Scale Reforms: In 2013, Pakistan entered a $4.393 billion EFF to address fiscal deficits and energy sector inefficiencies. By 2019, another $4.268 billion EFF was signed to stabilize foreign reserves and support reforms, but political and economic hurdles interrupted the program.
2020s: Pandemic Recovery and Major Loans: In 2023, Pakistan secured a $2.25 billion SBA to aid post-pandemic recovery. In 2024, the country signed its largest IMF program yet, a $5.32 billion EFF, aimed at addressing external debt, inflation, and sluggish growth. Conclusion: Since 1958, Pakistan has received $31.23 billion in IMF loans, drawing $17.85 billion. These programs have provided critical financial support during crises but often required tough structural reforms and fiscal discipline. Pakistan’s reliance on the IMF underscores its ongoing struggle to achieve sustainable economic growth and reduce dependence on external aid.
—The writer is Associate Professor at Health Service Academy, Chak Shahzad, Park Road, Islamabad.
(tariqali@hsa.edu.pk)
