Pakistan and the International Monetary Fund (IMF) have reached an agreement on a $6 billion bailout for the country. Although Prime Minister Imran Khan initially opposed the loan, he has now reluctantly agreed to the agreement.
The IMF is looking to give the debt-ridden economy of Pakistan a boost with a new bailout — most likely with many strings attached. Officials have called the country’s current import-export imbalance as an existential crisis for the country which requires serious restructuring.
Negotiations for the IMF deal have been ongoing since October. Despite many representatives within Pakistan decrying the international organization, calling it a tool of American dominance, they nonetheless had no choice but to comply.
Ernesto Ramirez Rigo, who led the IMF mission, told reporters this past Sunday:
“Pakistan is facing a challenging economic environment, with lackluster growth, elevated inflation, high indebtedness, and a weak external position.”
The bailout is currently pending approval by the IMF’s executive board.
IMF loans have historically been tied to specific requirements from countries on the receiving end. Called ‘structural adjustment,’ this often includes various tax reforms, privatization of basic social services, allowing for direct foreign investments, and adjusting interest rates in line with global expectations.
IMF Reasserts Control
The IMF’s bailout may be an effort to reassert itself on the world stage. In a growing, multipolar world order, the IMF has undoubtedly been losing some of its authority.
The IMF is facing pressure not only from current geopolitical realities but from emerging technologies as well. Last month, the IMF called cryptocurrencies ‘disruptors’ and warned that bankers should be cautious not to allow this new market to uproot traditional sectors of finance.
The IMF is likely feeling that it is increasingly ‘losing control’ in a world becoming more diverse in its interests and less bound to traditional international authorities.
Do you believe the $6B bailout to Pakistan will come with strings attached at the country’s expense? Is this an effort for the IMF to reassert itself on the world stage? Let us know your thoughts in the comments below.