Impact of IMF Programs on Pakistan’s Macroeconomic Stability; The Future of Pakistan’s Finances and Macro Economy

Abstract

This study focuses on the International Monetary Fund (IMF) programs' impact on macroeconomic stability in Pakistan, and whether this investigation helps determine how Pakistan's finances and macroeconomic framework look in the future. The motive for this study derives from Pakistan's deep reliance on the IMF, stemming from Pakistan's continuous engagement with the IMF given dire economic circumstances of persistent fiscal deficits, external bottlenecks and inflation. The investigation is based on two objectives aimed at assessing how effective the IMF funded reforms and policy activities are and what implications  for Pakistan's economic and fiscal future, which ultimately led to asking two research questions with regards to the nature of the correlation between IMF activities and macroeconomic stability indicators. The investigation adapted a quantitative research methodology, using a survey research methodology design. The structured questionnaire is sent to a sample of 150 economics, fiscal analysts, monetary specialists, finance specialists, academics and researchers. The study tested two hypotheses and examined the relationship between the IMF conditionality and macroeconomic stability indicators. Respondents were asked survey questions which were summarized in a pie chart to show how the results are distributed and the respondents' viewpoints. The study results indicate mixed feelings on the outcomes of the IMF program. For example, some experts believe Pakistan's engagement with the IMF provided some short-term stability, however, others believe continued fiscal and external vulnerabilities remain a risk. The overall conclusion of the study is that Pakistan obtains sustainable macro-economic stability only with a balanced policy mix, including fiscal discipline, structural reform and reduced external support for borrowing. It is important that future frameworks for economic growth include home grown, using international partners to support the development of stability and economic independence.

Keywords: IMF Programs, Pakistan’s Macroeconomic Stability, Pakistan’s Finances, Macro Economy