Exit of pakistan from imf: Implications for the economy

Abstract

International Monetary Fund (IMF) was established in December 1945. Pakistan became member of IMF in 1950. Due to poor economic conditions Pakistan sought help from IMF again in 2008. Fiscal programs of IMF have shown remarkable effects on economies of some countries. Yet in case of Pakistan there were negative effects. The primary reason is the non-compliance to the conditions agreed to at the time of obtaining loan. The factors leading to agreement were aimed to restore macroeconomic stability, bringing down inflation and strengthening foreign currency reserves. However later on, there was a continuous increase in budget deficit and inflation. Low level of economy and law and order situations affected the Fiscal policy of Pakistan. Lately, Government of Pakistan decided to quit IMF Program on its expiry on 30 September 2011, seemingly in view of fiscally better placed. In this paper an analysis has been made in view of post quitting scenario which may accrue to our economy.