Fiscal & Growth Impact of IMF Conditionality on Pakistan.

Abstract

As we know Pakistan economic condition has not been stable for some time and Pakistan has gone to IMF for financial assistance and to stabilize its deteriorating economy. So, we will be discussing effect of IMF conditions on the GDP growth and economy of Pakistan. The study will examine the growth of GDP in the context of direct tax, indirect tax, development expenditure, total expenditure. The main purpose of this study is to compare the economic condition in the years when Pakistan approached for financial help from IMF, to the years without IMF programs. The study has covered the functions of IMF, its conditions and loan history of Pakistan with IMF. This study is the analysis of the five variables which are direct tax, indirect tax, development expenditure, total expenditure and GDP growth of Pakistan during the IMF programs and how have they affected, if they have deteriorated or benefited with the IMF assistance. For this a regression model was run that concludes that Direct and Indirect taxes pose positive impact while IMF conditions and development budget pose negative impact on GDP growth. Total Expenditure doesn’t impact GDP growth. In this study descriptive statistics and regression analysis technique was used. In this study, impact on the fiscal growth and how tax revenue and government expenditures will effect our economic growth are elaborated.