Page 19 - CMA Journal (Mar-Apr 2023)

Focus Section

IMF Partnership and

Pakistan's Economic Future

S ince the conclusion of World War II, the International 1) Comprehensive
Monetary Fund (IMF) has wielded significant influence
Framework
over the global economy. Established on December 27, and Missed
1945, with headquarters in Washington, D.C., the IMF boasts Opportunities:
190 member countries and serves as a lender of last resort to
national governments. Its pivotal role extends to • The EFF aimed to
maintaining exchange-rate stability and fostering global create a robust found-
monetary cooperation. The IMF's overarching mission ation for Pakistan’s
includes ensuring financial stability, facilitating international economy by strength-
trade, promoting robust employment, sustainable ening fiscal and
economic growth, and alleviating poverty worldwide. external sustainability.

Pakistan's economic journey has been closely intertwined • Structural and insti- Muhammad Azam, ACMA
with the IMF. Throughout its history, the IMF has played a tutional reforms were General Manager
crucial role in extending financial assistance and providing crucial for fostering [Finance & Accounts]
policy guidance to Pakistan amid challenging economic balanced growth. Al-Haj Automo ve (Pvt) Ltd.
circumstances. Since its inception, Pakistan has repeatedly • Unf or tunat ely ,
sought IMF support to navigate various economic challeng- incomplete and uneven policy execution hindered
es, resulting in the country benefiting from 23 IMF loan progress.
programs. However, these interventions have not been
devoid of controversy, often accompanied by stringent 2) Early Progress and Subsequent Setbacks:
conditions with far-reaching implications for Pakistan's
economy and society. The economic landscape in Pakistan • Initially, there was encouraging progress, including
has encountered significant headwinds, resulting from a fiscal adjustments and transitioning to a flexible
confluence of factors such as in below table: exchange rate system.
• The establishment of a modern and independent
The policy implementation during the 2019–23 Exten- ded central bank was a positive step.
Fund Facility (EFF) in Pakistan faced significant hurdles,
resulting in missed opportunities and potential costs for • However, these gains were not sustained over time.
the economy. Let’s delve into the key aspects:

Factors Outcomes
Ongoing Crisis and
2022 Floods The
livelihoods.
External Financing
Constraints economic stability.

approximately ¾ month of

Infla on Surge
Rapid price increases reduced the purchasing power of
challenges for policymakers.
Fiscal Pressures and Debt The floods, coupled with policy slippages, have intensified fiscal pressures.
Sustainability

Social Discontent and Eroded
Living Standards -

Escala ng Poli cal Tensions

ICMA’s Chartered Management Accountant, Mar-Apr 2024 17