Pakistan reaches staff level agreement with IMF under stand by arrangements confirmed by PM Shahbaz Sharif and Finance Minister Ishaqe Dar in their tweets, a great sigh of relief for cash strapped Pakistani government reeling under immense pressure of 25 billion dollar loan payments in the coming months.
Under standby arrangements IMF will give 3 billion dollar to Pakistan in 6 to 9 months after three reviews as meeting between Pakistani PM Shahbaz Sharif and MD IMF Charistalina Georgieva at the sidelines of climate conference in France 🇫🇷 remained fruitful for the relief of many Pakistanis.
IMF programme under stand by arrangements finalised at staff level while IMF executive board will gave approval in its mid-july meeting for disbursement of funds to Pakistan who is on the edge of default having 3.5 billion dollars of reserves only sufficient for one month's imports.
What is good for Pakistan in IMF standby programme
- Pakistan will avert Looming danger of default by reaching staff level agreement with IMF.
- Secondly, IMF programme will open the doors of other lenders for Pakistan waiting for the materialisation of IMF programme and improve investor's confidence in the economy.
- Pakistani reserves will swelled up and pressure on Pakistani currency will mitigate.
- Pakistani currency will appreciate against US dollar due to IMF agreement impact in the shape of huge injection of dollars in Pakistan's economy.
- Analysts are of the veiw that there will be boom in stock exchange after IMF agreement.
What is bad for Pakistanis in IMF programme under standby arrangements
- Firstly, petroleum levy will be increased from Rs. 50 to 60.
- Secondly, electricity prices will be increased under stiff conditions of IMF by rupees 8 per unit.
- Thirdly,
IMF has asked to adopt market based exchange rate policy that will led to the increase of dollar price against Pakistani rupee.
- Fourthly, income tax has been increased by 2.5% and other taxes are also being increased that will bring new wave of inflation and further crush the Pakistanis already marred by sky rockting inflation.
- State Bank of Pakistan also increased key rate by 100 basis points making it difficult for traders to loans from local banks to run their business at highest ever markup rates.
What is IMF
In July 1944, a conference was held in Bretton Woods, New Hampshire, America in which IMF came into being to regulate the world economy after the end of world war II.
Total 44 countries from all over the world participated in this conference including major super powers America, Russia and United Kingdom.
In this conference stable exchange rate, world economic situation and rehabilitation of economy of european war torn countries came under discussion. To fullfill these objectives IMF and World Bank came into being.
What is IMF?
IMF is an international organisation with 190 countries as its members. The aim of IMF is to stabilise the world economy.
Any member country can apply for loan by fullfilling certain requirements:
● Sharing information about economy.
● Contribution of amount called qouta subscriptions.
Richer countries pay more subscriptions to IMF. USA, Japan, China, UK, Germany, Italy and France are the main donors to IMF. IMF hold 1 trillion US dollars as reserves.
When did Pakistan become member of IMF?
IMF came into being in 1944 while Pakistan got its membership on 11 July 1950.
What are functions of IMF?
● Overseeing the economies of member countries.
● Lending to the countries due to financial crisis
● Offering technical assistance for member countries.
Pakistan's loan history with IMF
Pakistan entered into 22 IMF programmes since
1950.
Pakistan and IMF made first agreement for loan in December 1958 for 2.5 crore dollars loan.
General Ayub Khan 
During military dictator General Ayub Khan's rule Pakistan went into three programs in 1958, 1965 and 1968 respectively with IMF.
Zulifiqar Ali Bhutto 
After the separation of east Pakistan in 1971, Zulfiqar Ali Bhutto reined the country and he joined 4 programs with IMF in years 1973,1974,1975 and 1978 respectively.
General Zial ul Haq
Military ruler General Zia ul Haq entered into two programs with IMF in years 1981 and 1983.
Benazir Bhutto / PPP
● In PPP's second tenure in office, Benazir Bhutto as Prime Minister joined two IMF programs in 1988.
● In second stint as Prime Minister Benazir Bhutto got three IMF programms in year 1994 & 1995.
● In PPP's government from 2008 to 2013, Pakistan joined one IMF programm.
Nawaz Sharif / PMLn
● In his first tenure as Prime Minister, Pakistan received one program from IMF in year 1993.
● In second tenure of Nawaz Sharif as Prime Minister Pakistan went into two IMF programs in year 1997.
● In Nawaz Sharif third government from 2013 to 2018, Pakistan entered into one IMF programm in year 2016.
General Pervaiz Musharaf 
In year 2001 and 2004, General Pervaiz Musharaf entered into two programs of IMF.
Imran Khan
In Imran Khan's stint in power from 2018 to 2022 Pakistan received one IMF programm 1n year 2019 which left incomplete by PTI government and being completed by PDM Government led by Shahbaz Sharif as Imran khan was outed from power due successful no confidence move.
Who did take more loan?
PPP took 47% loan from IMF, PMLn 35 % while military dictators took 18 % loan IMF.
0 Comments