Pakistan’s state sovereignty is not a joke or just maintainance of army and parliament elections. True sovereignty occurs when the nation’s budget, its economy, domestic and foreign policies, and development decisions are decided without any external pressure. But unfortunately, IMF Packages on Pakistan’s sovereignty has been destroyed in the last three decades by internal incompetence, external debts, and the slavish conditions of international financial institutions.
Pakistan has today become a “Debt Colony”, where the most important decisions are taken not in Islamabad, but in Washington, New York, and Brussels.
Relationship From History to Slavery
Pakistan tied bonds with IMF in 1958, when General Ayub Khan had no solution to outcome economic problems. Since then, Pakistan has knocked at the door of IMF for 24 times making it a record.
Sources:(IMF Historical Database, 2024).
Each dictator borrowed from the IMF and received Western support: Ayub (1958), Zia (1980s), Musharraf (2001) — meaning that the IMF has been not just a financial but also a political ally of the powers that supported undemocratic governments in Pakistan.When the Musharraf government joined the US “War on Terror” after 9/11 in 2001, the IMF
immediately released $1.3 billion in 2002 — as if the financial package wasn’t about the economic need but a reward for loyalty.
Why Pakistan Take Bailout Packages ?
Pakistan’s economy has long relied on imports, while exports are limited and undiversified. Whenever oil prices, food or currency markets are affected, the import bill increases and foreign exchange decreases.
Since efforts to stabilize exports (export-led growth) have failed in the past, Pakistan faces a current account deficit every two to three years, which has brought it to the doorstep of the IMF.But many high-level bureaucrats and trade lobbies deliberately prefer imports because they allow for huge profits through illegal means such as kickbacks and under-invoicing. This segment is the biggest obstacle to economic reforms.
Ruling parties also go to the IMF to get quick foreign exchange, so that they can temporarily suppress the economic crisis during the election period. Long-term reforms such as agricultural taxes, industrial improvement, and export policies are politically difficult to focus on, as they are prone to public resistance.
IMF programs are often used to fool the public by saying that they are “the burden of the policies of the previous government,” while the real culprits are the current elite and the actors within the establishment who control key decisions in each government.
The IMF is not just a financial institution, but is driven by the strategic interests of the US and the EU. The IMF is used as a soft weapon to control a nuclear country like Pakistan and a project like CPEC.In 2019, the IMF sought details of the CPEC agreements under pressure from India and the US. This shows that debt is not just a financial issue but a means of influencing foreign policy.
Pakistan’s key economic institutions like State Bank, FBR and Planning Commission have become vulnerable to political influence and unprofessional leadership over time. As a result, when a crisis hits, these institutions are not able to propose any policies for self sufficiency.
Negotiations with the IMF are often conducted by “retired bureaucrats” and World Bank-trained consultants like Shamshad Akhtar,Miftah Ismail,Imdad Ullah Bosal and some former financial ministers like Asad Umer and Younus Dagha who are blamed to have external agendas. These individuals make decisions in negotiations that weaken state sovereignty.
Impact of IMF Bailout Packages on Pakistan
A Treaty or Slavery?
IMF bailout packages are ostensibly financial aid agreements, but in reality they are documents of economic slavery. Through these agreements, Pakistan has to accept external interference in its fiscal, trade, and even constitutional policies. For example, under the 1990 program, the IMF demanded that Pakistan eliminate subsidies on electricity
and gas prices, which was implemented despite strong opposition from the civilian government.
Similarly, under the 2019 Extended Fund Facility (EFF) program, the IMF stipulated that the State Bank be made an “autonomous” institution, which was actually a ploy to remove control over monetary policy from the Pakistani government.
This meant that the State Bank was no longer accountable to parliament but was under the supervision of the IMF—what former Finance Secretary Waqar Masood called a “bargain of sovereignty.” This process was not only an end to fiscal control but also an attack on Pakistan’s political independence.
Budget by IMF—Not by Government
The most fatal aspect of the impact of IMF packages is that Pakistan’s fiscal decisions are no longer made by the Finance Ministry or Parliament, but by IMF technocrats.Budget is sent for approval after every single bailout, Take the example of the budget approved in June 2024, which included drastic measures such as increasing taxes on the salaried class, eliminating agricultural subsidies, and increasing sales tax to 18%, all at the insistence of the IMF. In contrast, there was no significant tax on the wealth of the elite, real estate, and business privileges — because the IMF only emphasizes meeting “revenue targets,” whether they are borne by the poor or the middle class. This is why the IMF packages have promoted “regressive taxation” in Pakistan, which increases socio economic inequality.
Rise of Basic Issues
IMF policies include the elimination of subsidies, devaluation of the rupee, and increase in indirect taxes attacking people directly.Inflation in Pakistan reached 38% in 2022, immediately after the IMF package, which was the highest level in the last 5 decades.
About 4 million people were declared poor by the end of same year.According to the World Bank, after the IMF programs, Pakistan’s unemployment rate reached 8.5%, which is one of the highest rates in the region. This situation weakens the country’s social fabric and gives rise to crime, mental health problems, and political unrest. Interestingly, the IMF ignores these effects by calling them “transitional pain,” even though this pain destroys the lives of millions of people.
A New Chapter of Imported Inflation and Corruption
The IMF repeatedly calls for a “market-determined exchange rate”, which means that the State Bank should not control the dollar. This policy was implemented in 2019, as a result of which the dollar rose from 138 rupees to 305 rupees (2023). Its effects not only increased inflation, but also benefited “currency smuggling” and hundi hawala networks.
According to the FIA report, about $ 2.3 billion was smuggled into Afghanistan illegally in 2023. All these are side effects of the IMF policy, which weakens not only the economy but also state institutions.
Pressure on China and CPEC
Several IMF programs have included secret clauses that are related to Pakistan’s foreign policy. In the 2020 program, the IMF asked Pakistan for details of CPEC loans and contracts, which China insisted on keeping “secret.” This also caused a chill in Pakistan-China relations.
This makes it clear that the IMF is not just a financial institution, but a strategic tool of major powers — which keeps countries like Pakistan under pressure for their geopolitical interests. Some quarters call it part of “Debt Trap Diplomacy.”
Privatization of State Enterprises
One of the basic conditions of the IMF is that Pakistan sells its national enterprises to repay the loan. Examples of this can be seen in the privatization of Pakistan Steel Mill, PIA, and DISCOs. In 2024, the government initiated the privatization of PIA under IMF pressure,and our own leaders were interested to buy these assets,even though it was a
strategic national institution.
Similarly, the IMF asked Pakistan to prepare a list of more than 200 institutions available for privatization under the “SOEs Act” 2023. The result of these decisions is that Pakistan is losing its national assets, which not only generated revenue but were also a symbol of sovereignty.
Powerless Parliament
After the IMF packages, decisions are not made by elected bodies but by technocrats, bureaucrats and advisors affiliated with the IMF. When the budget was approved on IMF terms in 2023, many members of parliament said
that “we only have the authority to sign the budget, decisions are made elsewhere”. This situation is eroding parliamentary autonomy. Even regulatory bodies like NEPRA and OGRA set rates according to the wishes of the IMF — not for the public interest.
Impact on National Security
National security is also affected. IMF programs have pushed Pakistan towards “Defensive Budgeting”, where the development budget is being cut, and only debt and interest payments have become a priority. In FY2024-25, Pakistan spent Rs8.2 trillion on interest payments — more than its total tax revenue.
Thus, defense, education, health, and scientific development, which are the backbone of any national security, were consistently neglected.
A Visionary Solution
IMF bailout packages ostensibly provide temporary economic support for Pakistan, but their real price is paid in the form of sacrifice of state sovereignty, public interest, and national control over economic policies. The main reasons for Pakistan’s economic slavery are internal corruption, a flawed tax system, and the failure of state institutions.
Tax evasion of about Rs. 5,000 billion every year, 20-25 percent of the budget is lost to corruption, and government institutions running at a loss of thousands of billions of rupees, force Pakistan to continuously borrow. The IMF uses these failures as a justification to impose strict conditions, including the elimination of subsidies, increasing interest
rates, currency depreciation, and the sale of national institutions for a pittance in the name of privatization.
If Pakistan carries out tax reforms, imposes meaningful taxes on real estate and large industrialists, improves the export value chain (such as IT and engineering), and holds the corrupt elite accountable, then permanent relief from the IMF is possible.
Pakistan has not yet conducted an impartial audit of its debt because it affects the interests of the elite, and international institutions are also wary of such accountability lest their own reputation be affected. Many important economic policies are actually made under pressure from foreign embassies and international financial institutions, which undermines the state’s policy autonomy.
The only way out of the IMF is a comprehensive economic, political, and administrative reform package, which includes debt renegotiation, efficient production of dmestic resources, and transparent reforms of public sector institutions.
Otherwise, instead of becoming economically independent, Pakistan will remain a state that will be forced to look to Washington or Riyadh for every budget, every policy, and every development project. This is a war of national self-sufficiency, which can be won not on the basis of bailouts, but only through internal self-reliance, true accountability, and visionary leadership.
References
IMF projections on external debt (Business Recorder)، May 19 2025
https://www.techjuice.pk/imf-projects-pakistans-external-debt-to-reach-126-7-billion-by2025-26/?utm_
Pakistan Economic Survey, June 2024 (The News)
Ministry of Finance Semi‑Annual Bulletin, Dec 2024
https://www.nation.com.pk/29-Mar-2025/pakistan-s-total-debts-rise-to-rs74-trillion?utm_
Fitch Ratings external financing risks report
Pakistan Ministry of Finance Debt Sustainability Analysis FY2024
https://www.finance.gov.pk/publications/DSA_ReportFY2025_27.pdf?utm_source=chatgpt.com
