Pakistan is reaching out to the International Monetary Fund (IMF) hoping to get rid of the financial crisis. However, the IMF is not willing to help them this time. Recently, a delegation of IMF visited Pakistan. The members of the party were checking everything by meeting for 10 consecutive days. But after the discussion, the IMF delegation rejected Pakistan’s request.
But this is not the first time, Pakistan has reached the International Monetary Fund many times before. According to the data, Jinnah’s country has sought loans from the IMF a total of 23 times. Argentina is second only to Pakistan in terms of borrowing. They have asked for loans 21 times in total. India has been on a downward spiral since that day. They had to go to IMF only 7 times.
In 1991, the Narsimha Rao government had to visit the IMF for the last time. Former Deputy Governor of the Central Bank of Pakistan, Murtaza Saeed, criticized the rulers of Pakistan. He said, 23 times in 75 years, shaking hands with the world cannot be the right way to run the country. He also said that only when a country’s foreign exchange reserves are exhausted, it goes to the IMF. This currency is used to repay foreign debt and cover the cost of imports.
A country can increase its foreign exchange reserves mainly in two ways. First of all can run Current Account Surplus. In this case, the remittances of workers working abroad and exports are more than imports. Second, if a country runs a Current Account Deficit. In this case, they can meet their deficit by taking loans from other countries. At the same time, foreign exchange reserves can increase. Several major economies in Asia have run current account surpluses.
But Pakistan has done the opposite. Currently, Pakistan has a huge current account deficit. For example, Pakistan’s current account deficit was more than 3 percent of its GDP in 2017-19 and 2022. In such a situation, Pakistan is repeatedly getting its hands at the court of the IMF. The reason for Pakistan’s situation is that its exports are very weak. Exports account for only 10 percent of the country’s total income. In other countries this share is much higher. Like 20 to 30 percent of GDP.