Pakistan-IMF relations getting too complicated

The IMF program is in limbo, foreign exchange reserves of Pakistan are at the lowest level, economy is deteriorating fast and, worst of all, political violence is touching new highs. I have picked up these lines from a daily report of Chase Securities, one of Pakistan’s leading brokerage houses.  

If there is a relationship status of Pakistan and IMF right now, one would say “It’s Complicated”. Since the beginning of the Political turmoil and law and order situation after it, analysts believe that the hopes to get an IMF Program are low.

Politics had always remained volatile in the history of Pakistan and also during the previous IMF programs and reviews.

In 1993, President dismissed Prime Minister and dissolved assemblies after which, a legal battle began in courts resulting in restoration of Government by the Supreme Court and then elections were held in October 1993. One month before the elections and during the political turmoil, Pakistan signed an IMF program in September 1993.

In 1996, PPP Government was dismissed before completion of term and the brother of the then Prime Minister Benazir Bhutto was assassinated leading to ethnic violence. Elections were held in early 1997 and Pakistan signed the IMF program same year.

In 2000, coup had happened and the then Prime Minister was imprisoned for life. Economy had crashed and reserves were less than USS1 billion leading the country to sign the IMF program same year.

IMF program is more to do with how the country plan to manage its economy, implement the reforms and achieve the program targets.

However, to do so, political stability is of high importance and it is still time we get the house in order before it’s too late.