The International Monetary Fund (IMF) 9. It may unlock an immediate payment of approximately $ 1 billion to Pakistan as part of an ongoing widespread fund (EFF) that provides financial assistance to countries facing serious medium -term payment problems.
Here is a view of the long history of the IMF rescuers has spread to Pakistan:
In recent years, Pakistan has been struggling with a number of overlapping crises, including the revival of the “state of sponsored terrorism” and the degree of tension of borders with Afghanistan and Iran. These challenges were enhanced by a deeply polarized and unstable political landscape that has long characterized the country’s administration.
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Pakistan has concluded 25 financial measures – often referred to as “help” – with the IMF since he became a member in 1950, and since then has included more than 20 loans on the solving of persistent economic problems such as fiscal deficits, structural reforms and crisis balance of payments.
Liabilities for rental IMF in Pakistan. (Data Source: IMF)
In the last rescue, the IMF approved an immediate payment of approximately $ 1 billion to Pakistan as part of its ongoing EFF. According to the terms of the agreement, Pakistan is approximately $ 1 billion for seven equal installments, each, with the successful completion of biannal reviews.
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The three-year package helps 7 billion USD-graded in July-Zabistan supports to achieve macroeconomic stability and promotion of inclusive resistant growth. The approval of the Executive Council of the IMF led to an immediate release of $ 1 billion to Pakistan and increased the total payouts under the loan for approximately $ 2 billion.
Types of help:
1. A quick financial instrument (RFI): RFI is designed to provide immediate financial assistance to countries that face urgent financial needs, such as those caused by natural disasters, conflicts or a serious payment crisis, according to the IMF.
Use in Pakistan: On April 16, 2020 IMF, RFI arranged for Pakistan due to the economic impact of the Covid-19 pandemic. This arrangement provided Pakistan financial assistance in the form of $ 1,015,500 special rights to draw SDR (at that time approximately $ 1.4 billion).
What is the right special drawing (SDR)?
Special Drawing Law (SDR) is an interest -based international reserve asset created by the IMF in 1969, which complements existing reserve assets of Member States. It is based on an international currency basket that currently includes the US dollar, Japanese only, Euro, a pound of Sterling and Chinese Renminbi (Yuan).
2. Stand-PO arrangement (SBA): SBA was agreed between Pakistan and the IMF on November 24, 2008. It was in the middle of the global financial crisis that had a serious impact on the Pakistani economy. Pakistan was entitled to draw $ 4,936,035, which was approximately $ 7.6 billion at the time.
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3. Extended Fund Fund (EFF): EFF is a longer -term arrangement and usually includes complex reforms that deal with structural weaknesses in the country’s economy. The EFF agreement with Pakistan was ready to take place from 3 July 2019 to 30 June 2023. Pakistan was entitled to draw a total of $ 3,038,000 special drawing rights (SDR), which was approximately $ 6 billion at the time of the agreement.
Why then swirls in a debt spiral?
Economic reforms led by the IMF in Pakistan began in 1978 under the military regime of General Zia-HAQ. Previously, during the sixties and 70s, Pakistan watched policies aimed at reducing business addiction to the global north and relied on soft loans to support their early development goals. However, after the price of the price of global commodities and an increase in US interest rates at the beginning of the 80s, Pakistan, like many developing countries, faced a serious financial restriction.
At this point, the IMF and the World Bank began to condition other loans to carry out specific economic policies, such as privatization of state -owned enterprises, removal of subsidies and the devaluation of currency.
How from 1994 Pakistan private power for energy?
The 1994 private energy policy, which was designed according to the IMF instructions, allowed foreign corporations to set up power plants in Pakistan with guaranteed profits in US dollars, minimal initial investment and free repatriate income.
At the beginning of 80. 9,90 to 1 $ (1982). In 1994 stood Rupee on Rs. 30 to $ 1, which means a significant decline in its value in the previous decade.
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In addition, the weak tax system of Pakistan is the main driving force of its debt spiral. With less than 1% of the population that pays income tax, the government largely depends on indirect taxes that are disproportionately burdened. This insufficient income forces excessive loans, growing debt and interest payments, which deepens the fiscal crisis and maintains a vicious economic cycle.
Pakistani terrorist factor
Since 2018, Pakistan has been determined by the country of specific interest (CPC) under the International Act on Religious Freedom of 1998. In 2022, CPC was redesigned.
According to the world book CIA, Pakistan is one of the world’s best transit corridors for opiates and hemp products traded with Afghanistan and Iran.
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The Pakistani army played an intense role in the destabilization of Pakistan’s administration, with several prime ministers excluded or released by military interventions, which contributes to short -term administrations. Moreover, corruption, political instability and judicial interventions undermined the powers of elected governments.
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As a result, none of the twenty -two prime ministers of Pakistan has been able to complete the five -year term from independence.
As terrorism expands and the security conditions deteriorate, the separatist movements and other armed groups can regain strength, which represents an important challenge for the financially tense government of Pakistan.
The humanitarian crisis in Pakistan
According to the World Food Program report, Pakistan ranks as 8. The most vulnerable countries on the impact of climate change, a reality that is illustrated by devastating floods from 2022.
“Women and girls face significant obstacles to approach to government services due to deep-rooted social and cultural standards. More than 26 million children aged 5 to 16 are at a school-to-school-more than half of them,” according to the report.
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The rise of suicide bombers in Pakistan reflects a shift in strategies and tactics of terrorist groups. In many parts of traditional Pakistani society, there is resistance to women who receive formal education.
Whether united or fragmented, stability and administration. Destabilized Pakistan increases the likelihood of further distribution of terrorist groups in the region.
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