What’re IMF Bailouts? Pakistan’s IMF Bailout history…

International Monetary Fund 

The International Monetary Fund (IMF) was established in 1944 to promote international economic cooperation and provide its 189 member countries with short-term loans (maximum Limit 1 trillion $) if they experience a financial crisis or a shortage of liquidity for international trading.

Out of the 36 lenders, the five largest contributors to the IMF are the United States (16.75%), Japan (6.23%), Germany (5.81%), France (4.29%), and the UK (4.29%)—all of which, unfortunately, are in debt.

IMF bailouts

IMF bailouts typically have a short-term focus. Recipient countries are forced to implement economic reforms to return their budgets to surplus in a short period of time. However, in the long term, tough austerity packages may further deteriorate the weak economies of recipient countries.

Additionally, IMF bailout policies are overly rigid as they fail to accommodate a recipient country’s economic status and cultural background as part of the bailout design and implementation process.

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Obligation On Bailed-Out Countries.

Bailed-out countries are required to implement a series of economic reforms in line with IMF policy. Debates about the appropriateness of the IMF bailouts continue to thrive. Opponents of IMF bailouts argue that they make troubled countries further dependent on the IMF, while proponents claim that the liquidity supported by the IMF is crucial in preventing extreme financial consequences.

IMF Bailouts Include…..

IMF programs have three components: financing packages, structural reforms, and macroeconomic policies. These three elements are inseparable as together they form a single offer of assistance, known as an IMF-supported program.

IMF bailout package

In what way, if any, do IMF bailouts contribute to a country’s financial recovery and stability?

The IMF provides financial assistance to countries only if they agree to implement a series of economic policy reforms to revive and maintain a sustainable economic growth rate in the long term.

Debtor countries are normally reluctant to do so because they need to give up a certain level of solvency autonomy in order to receive external financial support.

Typical economic reforms include

  • Devaluing currencies
  • Lowering tariffs
  • Encouraging foreign investment
  • Privatizing state-owned enterprises
  • and reducing expenditure on the public sector.

It is fair to say that these policy reforms are mainly free-market oriented.

The IMF was criticized for forcing recipient countries to take on policy reforms without considering the difference in economic status, business environment and culture among these countries.

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In addition, the tough austerity package attached to bailout funds has implications for leadership at the highest level and forces governments in recipient countries to sacrifice

  • Policy autonomy,
  • Cut public spending
  • increase tax 
  • and retrench staff, in order to return budgets to surplus in the short term.

Unfortunately, these policy reforms often lead to

  • Inactive business investment,
  • Poorer government service,
  • Severe social instability
  • and a higher unemployment rate—

all of which may damage the economic development of bailed-out countries in the long term.

For example, the IMF has been criticized for being one of the major causes of the 2014-2016 Ebola outbreak in Africa, because its policy of prioritizing debt repayment over domestic spending has weakened the public health infrastructure in Sierra Leone, Guinea and Liberia who were hit hardest by the epidemic.

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IMF bailout Package

Pakistan’s History with IMF

At a Glance

2019 Projected Real GDP (% Change) : 2.9
2019 Projected Consumer Prices (% Change): 7.6
Country Population:  204.729 million
Date of Membership: July 11, 1950
Outstanding Purchases and Loans (SDR): 4153 million (March 31, 2019)
Special Drawing Rights (SDR): 269.24 million
Quota (SDR): 2031.0 million
Number of Arrangements since membership: 21

All loans are in thousands of SDRs (SDR is IMF currency, 1 SDR=1.39 USD)

Facility Date of  Expiration Amount  Amount  Amount 
Arrangement Date Agreed Drawn Outstanding
Extended Fund Facility    Sep 04, 2013    Sep 30, 2016 4,393,000 4,320,000 4,320,000
Standby Arrangement    Nov 24, 2008    Sep 30, 2011 7,235,900 4,936,035 0
Extended Credit Facility    Dec 06, 2001    Dec 05, 2004 1,033,700 861,420 0
Standby Arrangement    Nov 29, 2000    Sep 30, 2001 465,000 465,000 0
Extended Credit Facility    Oct 20, 1997    Oct 19, 2000 682,380 265,370 0
Extended Fund Facility    Oct 20, 1997    Oct 19, 2000 454,920 113,740 0
Standby Arrangement    Dec 13, 1995    Sep 30, 1997 562,590 294,690 0
Extended Credit Facility    Feb 22, 1994    Dec 13, 1995 606,600 172,200 0
Extended Fund Facility    Feb 22, 1994    Dec 04, 1995 379,100 123,200 0
Standby Arrangement    Sep 16, 1993    Feb 22, 1994 265,400 88,000 0
Structural Adjustment Facility Commitment    Dec 28, 1988    Dec 27, 1991 382,410 382,410 0
Standby Arrangement    Dec 28, 1988    Nov 30, 1990 273,150 194,480 0
Extended Fund Facility    Dec 02, 1981    Nov 23, 1983 919,000 730,000 0
Extended Fund Facility    Nov 24, 1980    Dec 01, 1981 1,268,000 349,000 0
Standby Arrangement    Mar 09, 1977    Mar 08, 1978 80,000 80,000 0
Standby Arrangement    Nov 11, 1974    Nov 10, 1975 75,000 75,000 0
Standby Arrangement    Aug 11, 1973    Aug 10, 1974 75,000 75,000 0
Standby Arrangement    May 18, 1972    May 17, 1973 100,000 84,000 0
Standby Arrangement    Oct 17, 1968    Oct 16, 1969 75,000 75,000 0
Standby Arrangement    Mar 16, 1965    Mar 15, 1966 37,500 37,500 0
Standby Arrangement    Dec 08, 1958    Sep 22, 1959 25,000 0 0
Total 19,388,650 13,722,045 4,320,000



Stand-by Agreements or SBAs are short- to medium-term loans that have to be paid back between 3.5 to 5 years. The loan may be given in up to three years, but is usually given in a 12- to 18-month period. Stand-by Agreements come under the General Resource Account, which means they’re not specifically designed for poor countries, unlike programs under the Poverty Reduction Growth Trust.

But what about the remaining nine agreements? These agreements are for a number of IMF programs aimed at poverty reduction, structural reform, containing a domestic economic crisis, or protecting smaller weaker economies against the effects of a broader international crisis

Of the nine loans other than IMF bailouts taken by Pakistan, four were given under the PRGT, which means they were given to us to help alleviate poverty and boost economic growth.

Between 1980 and 1995, we were part of another seven programs and all but one were between one and two years long.

IMF Bailout Package

Bailout Packages By PML-N & PPP

Between 1997 and 2013 — when the PML-N took out the last $6.4 billion loan — there were a total of six programs. With the exception of one, all of them were approximately three years long.

PML-N accepted four IMF deals from 1990 to 2017 out of which three are IMF bailouts. PPP is the only ruling party which added the most to Pak Loans by arranging and accepting 9 IMF packages from 1973-2008.

This will be the 13th time we will be going to ask for an IMF bailout, and overall it will be the 22nd loan we will take from the IMF.

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