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Economic & Financial

Pakistan is facing significant challenges with its IMF program, which has led to high interest payments and negative impacts on public spending and economic growth. While there are signs of improvement in the economy, these are largely due to restrictive policies and do not benefit the common people, necessitating structural reforms to attract investment. Additionally, a new strategic partnership between France and Saudi Arabia aims to enhance cooperation and reduce conflict in the Middle East.

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Daniyal Haider
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7 views1 page

Economic & Financial

Pakistan is facing significant challenges with its IMF program, which has led to high interest payments and negative impacts on public spending and economic growth. While there are signs of improvement in the economy, these are largely due to restrictive policies and do not benefit the common people, necessitating structural reforms to attract investment. Additionally, a new strategic partnership between France and Saudi Arabia aims to enhance cooperation and reduce conflict in the Middle East.

Uploaded by

Daniyal Haider
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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IMF Related:

 Holding the IMF to account: an unfit programme design and odious lending practices will cast a long
shadow on Pakistan. The design of fund programme creates perverse incentives and has unintended
consequences. In Pakistan scenario, perpetual negative feedback loops in tax collection and the energy
sector.
 Since 2022 alone, Pakistan has paid the IMF a whopping $750 million in interest and charges.
 IMF Estimates: There is no doubt that the economy is showing signs of ‘improvement’ after a couple of
highly turbulent years, with moderate growth returning, inflation declining, external pressures easing due
to IMF funding, the exchange rate stabilising and the current account deficit shrinking. But these
improvements are due to cuts in essential public spending and restrictive policy decisions — including
limits on imports and high interest rates. In short, growth continues to be constrained by balance-of-
payments issues and an excessive public debt burden. It also means that the economic stabilisation
achieved so far will likely dissipate when the economy moves towards a higher growth trajectory.
Therefore, the improved indicators do not reflect any gains for the common people. If anything, Pakistan
is undergoing an ‘adjustment process’ under the IMF. Shifting the economy to higher gear without first
tackling the balance-of-payments constraints would be a blunder and lead the country back into the deep
financial crisis as repeatedly seen in the past. What Pakistan needs is to use this ongoing adjustment period
to undertake structural reforms to attract foreign private investment for boosting agricultural and industrial
productivity in order to increase exports. In short, Pakistan must learn to walk before starting to race.

International Diplomacy:
 Saudi-France Partnership deal: French president Emmanuel Macron signed a strategic partnership on
2 dec aimed at deepening bilateral ties and de-escalating conflict in the Middle East.
a) The new partnership aimed at improving cooperation in the “defence, energy transition, culture,
mobility between the two countries.”

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