Pakistan’s $7 billion deal with the International Monetary Fund (IMF) in 2024 marked the 24th such agreement since 1958, a telling symptom of the country’s chronic dependence on external bailouts.
While each IMF programme aims at stabilising the economy through macro-economic discipline, Pakistan continues to fall short of the structural reforms necessary to create long-term resilience.
The deeper issue lies not in the conditions the IMF sets, but in the political unwillingness of Pakistan’s ruling elite to undertake reforms that would curtail their own privileges, address widespread tax evasion, and prioritise equitable economic governance.
Time and again, the IMF prescribes fiscal targets about reducing deficits, increasing revenue, and rationalising subsidies. However, it refrains from micromanaging how governments meet those goals.
This leaves crucial choices in the hands of the leaders sitting in the federal capital which often takes recourse to politically convenient but socially regressive options.
Only around two per cent of Pakistanis pay income tax, and the most lucrative sectors — agriculture, real estate and retail — remain largely untaxed.
In 2023, 68pc of registered traders filed ‘nil’ returns, while large landowners in Punjab and Sindh, shielded by political influence, continued to avoid agricultural taxation. The salaried class and consumers of petroleum products end up shouldering the lion’s share of the tax burden.
The IMF recommends pension reforms as a way to reduce long-term fiscal liabilities. However, even as pensioners face cuts, elite privileges persist unchecked.
The national energy sector is another area where inequity is institutionalised. Instead of usage-based monthly billing, the government has imposed fixed gas charges that hurt low-income consumers.
The IMF does call for cost recovery, but equitable policy implementation through progressive tariffs, lifeline slabs and curbs on electricity theft remains entirely within Pakistan’s control.
The IMF is surly not blind to the utter misuse of state resources, but it has a limited mandate. It operates only as a facilitator of macroeconomic stability, not as an enforcer of social justice.
A sustainable way forward requires reversing this equation. Luxury expenditure by state institutions must be capped. Subsidies should be redirected to those who need them the most.
Comprehensive taxation reforms are essential. Utility pricing must follow a progressive model. And, finally, the IMF support should be linked to governance reforms, including public asset disclosure, anti-corruption mechanism, and fully transparent cost-benefit evaluation of all mega projects. Pakistan’s dependence on the IMF is not a failure of techno- cratic policy, but of political courage.
GHULAM ARIF KHAN
KARACHI
