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57 lines
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57 lines
2.7 KiB
Markdown
# International Monetary Fund and Structural adjustment programs (SAPs)
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15-07-2025
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[[Pakistan Affairs]] [[international relations]]
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The International Monetary Fund (IMF) is a major financial agency of the United Nations, with headquarters in Washington, D.C. It is regarded as the global lender of last resort to national governments. 191
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According to the IMF itself, it works to foster global growth and economic stability by providing policy advice and financing to its members. It also works with developing countries to help them achieve macroeconomic stability and reduce poverty.
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## Structural Adjusment Programs
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Structural adjustment programs (SAPs) consist of loans provided by the International Monetary Fund (IMF) and the World Bank (WB) to countries that experience economic crises.
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## Conditionality of loans
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The IMF and World Bank (two Bretton Woods institutions) require borrowing countries to implement certain policies in order to obtain new loans (or to lower interest rates on existing ones). The IMF does require collateral from countries for loans but also requires the government seeking assistance to correct its macroeconomic imbalances in the form of policy reform. If the conditions are not met, the funds are withheld.
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These policies are typically centered around
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- increased privatization
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- liberalizing trade and foreign investment
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- balancing government deficit
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## Pakistan and IMF
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Pakistan has been a member of the International Monetary Fund (IMF) since 1950. Due to the high unpredictable nature of its economy and its dependence on imports, the IMF has provided loans to Pakistan 24 times, with its most recent being in 2024. Out of that Pakistan has recieved 23 bailouts.
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IMF gave Pakistan loans based on the following conditions
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- increase in energy prices
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- removal of energy subsidy
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- increase in taxation
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- privatization of public entities
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### Why Pakistan needs IMF
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1. Chronic Fiscal Deficits
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2. Debt Servicing
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3. Balance of Payments Crisis
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4. Currency Devaluation
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5. Inflation and Food Security
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6. Energy Sector Deficits
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7. Political Instability and Governance
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### Cons
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1. Debt Dependency and Loss of Economic sovereignty
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2. Harsh Austerity Measures
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3. Stifling Economic Growth
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4. IMF Conditions Increase Inflation
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5. Currency Devaluation
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6. Reduction in Public welfare programs
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7. Political and Social Instability
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## Mind Map
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![[international monetary fund mindmap.excalidraw|600]]
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## Related Ideas
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## References
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[International Monetary Fund, *Wikipedia*](https://en.wikipedia.org/wiki/International_Monetary_Fund)
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[Structural adjustment,*Wikipedia*](https://en.wikipedia.org/wiki/Structural_adjustment)
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[Pakistan and the International Monetary Fund. *Wikipedia*](https://en.wikipedia.org/wiki/Pakistan_and_the_International_Monetary_Fund) |