There are quite a few voices about adverse impacts of standby facility on the economy & people of Pakistan. However, very little empirical research was conducted on this issue to back the above-mentioned hypothesis with substantial evidence. To fill the vacuum, SDPI in collaboration with Action Aid Pakistan have conducted a research study on the on-going International Monetary Fund (IMF) Stand-By Arrangement and its Impact on the Economy and the People of Pakistan.
IMF’s lending arrangement with Pakistan, worth SDR 7.23 billion (US $ 11.3 billion) aims to “(i) restore the confidence of domestic and external investors by addressing macroeconomic imbalances through a tightening of fiscal and monetary policies, (ii) protect the poor and preserve social stability through a we-targeted and adequately funded social safety net and;(iii) raise budgetary revenues through a comprehensive tax reform to enable significant increase in public investment and social spending required for achieving sustainable growth”.
The broad objective of the study was to examine critically the conditionalities attached to the program under the Agreement and to examine their impact on the economy as a whole relating to the welfare of the people, especially in the context of education, health and social safety nets for the poor. It provides an insight into the facts as to whether these conditionalities may be facilitating the achievement of the objectives or are in conflict with some or all of them.
The main elements of conditionalities attached to the loan arrangements have been identified to gauge whether the program is home-grown or designed by the Fund under stringent conditions, in view of the compelling circumstances of the national economy which after experiencing a phase of significant economic and social development, deteriorated sharply in the form of an economic crisis since mid-2008.
It has been determined that this programme was essential to keep the economy afloat in 2008. While the programme promotes a tight monetary and fiscal policy, the government must ensure that development related spending is not curtailed to provide for other non-productive expenditures. This study concludes that although the implementation of conditionalities may prove challenging; and may have negative effects on livelihoods of people at micro level, yet this program may provide the basis for essential reforms (such as documentation of economy, reforms in power sector governance, etc) to restore the financial and economic health of Pakistan.
For further details contact Mr. Nazre Hyder. email@example.com