Page 16 - CMA Journal (Mar-Apr 2023)

Focus Section
Focus Section

IMF, Political Will, And Declining

Investments in Pakistan -

When will the Saga end?

The writer has contributed this article exclusively for the current issue of CMA Journal
S ocial media is flooded with glamorous footage of an arrangement. Seeking Muhammad Azfar Ahsan

industry magnate’s pre-wedding celebrations in the
assistance from the IMF
neighboring country. The point to note is the presence of has become a recurrent Pakistan's former
global investors, and tycoons who have come down to event in Pakistan, with Minister for Investment
enhance business targets by investing in the Special the intervals between
Economic Zones and collaborative ventures. New visits notably shrinking over the years. Between 1958
international brands are being launched on the side, and 1988, Pakistan entered 11 lending commitments
enabling the country to go way beyond the US$80 billion with the IMF, while in the more recent period of
in Foreign Direct Investment (FDI) in 2022. On the 1993-2001, eight lending commitments were made in
contrary, Pakistan reported a meagre and stagnating FDI. less than one-third of the previous timeframe.
Reviewing the FDI data, it comes as no shock (for I had
Pakistan stands fifth globally in terms of outstanding
predicted this)- in the first half of FY24, Pakistan only debt to the IMF, reaching a total of US$7.4 billion. In the
received US$863 million, which is up by 35%. For a
fiscal year 2023, Pakistan received a significant amount of
country with over 250 million people, this is not enough. US$894 million from the IMF, with charges and interest
Despite earnest efforts by the Special Investment
payments reaching US$776 million and US$325.8 million,
Facilitation Council (SIFC) to create an enabling
respectively. The noteworthy figure for 2022, totaling
environment for businesses and investors, the US$1.64 billion, highlights the country's growing
anticipated surge in FDI has remained elusive.
financial reliance on the IMF, prompting concerns about
The investment sector in Pakistan has consistently held its economic challenges and developmental initiatives.
potential opportunities, yet its advancement has
The IMF is strictly for economic stability and growth,
frequently faced interruptions due to bureaucratic red
through financial aid, policy guidance, and technical
tape or lack of political will, political instability, and, most support to its member countries. The focus is on various
significantly, unpredictable shifts in the policy
objectives, including the promotion of macroeconomic
framework. The prevalence of uncertainty in the stability by collaborating with nations to maintain low
environment has led existing investors to question their
inflation, stable exchange rates, and sustainable fiscal
sustainability, while potential investors find compelling
and monetary policies. It actively works to prevent and
reasons to refrain from committing funds for future address financial crises; aiding countries facing balance
returns in Pakistan.
of payments issues to stabilize economies and restore
The financial situation enters the red zone investors’ confidence.
intermittently compelling Pakistan to seek advice from
Additionally, the IMF advocates exchange rate stability,
the International Monetary Fund (IMF), way too often -
facilitates poverty reduction through social measures,
23 lending programs so far. Pakistan has recently supports capacity-building in member countries for
entered another IMF standby arrangement, amounting
effective economic policy implementation, and serves as a
to US$3 billion, with an initial payment of US$1.2 billion platform for international economic cooperation. Through
and the remaining US$1.2 billion scheduled to be regular financial surveillance and assessments, the IMF

disbursed over the nine-month duration of the
identifies global economic risks and vulnerabilities.
ICMA’s Chartered Management Accountant, Mar-Apr 2024 14