PAKISTAN’S DEBT CRISES: BETWEEN IMF DEPENDENCEAND PERMANENT AUSTERITY

Dr.Farwa Sial –

Chronic IMF Dependence: Since 1958, Pakistan has entered into 25 IMF loan arrangements.
The Pakistan-IMF relationship has remained constant across both military and democratic
governments. Interest surcharges alone cost Pakistan an estimated US$65 million between
2018 and 2020, with surcharge payments for 2021-2028 projected at US$392 million.

Structural Economic Weaknesses: The economy has shifted from agriculture towards
services while manufacturing has stagnated at 12-13% of GDP. The country’s tax-to-GDP ratio
remains critically low at 10.5% (2023), with regressive fiscal burdens on the salaried classes.

Debt-Driven Policy Conditionalities: IMF programmes have consistently mandated mass
privatisation, elimination of essential subsidies, dramatic utility price hikes, austerity and
other policies with long-term structural implications for the economy and citizens of Pakistan.

Socio-Economic Devastation: Conditionalities have reduced pension benefits, mandated
privatisation of primary schools and health services, and triggered crackdowns on political
opposition. Climate-induced flooding in 2022 heightened default risk perceptions, leading to
sovereign credit rating downgrades and restricted capital market access.

This Policy brief is part of the editorial series published during the Experts meeting and International Conference organized by IDAN on Senegal’s debt Crisis (11 to 13 May,Dakar,Senegal).