Pakistan has once again secured a bailout from the International Monetary Fund (IMF), and Prime Minister Shehbaz Sharif has hailed it as a “major milestone” in the country’s economic recovery. The deal, which includes a $1.3 billion loan along with $1.3 billion in climate financing, is being celebrated as a significant achievement. But should it be? Or is it just another chapter in the ongoing cycle of dependency that has long plagued Pakistan’s economy?
A Bailout or a Band-Aid?
Without presenting substantial evidence, the Prime Minister claimed that the agreement would increase Pakistan’s foreign reserves to $8.3 billion. While this might provide short-term relief, it does little to address the core issues underlying Pakistan’s financial instability. True economic recovery is marked by sustainable growth, industrial expansion, and increasing exports—none of which are being meaningfully addressed through this bailout.
A country’s progress should not be measured by its ability to secure loans but by its ability to generate self-sustaining economic momentum. Yet, Pakistan continues to celebrate debt inflows as though they are a measure of success. The real question is: Why do we glorify borrowing when we should be striving for self-sufficiency?
Ignoring the Real Economic Contributors
Instead of focusing on remittances—rent-free, tax-free, and corruption-free capital—Pakistan’s leadership fixates on foreign aid and loans. Overseas Pakistanis sent $3.1 billion in remittances in a single month, contributing to a 32% year-on-year increase to $24 billion in 8MFY25. This is real money coming into the country without the burden of interest payments or conditions attached. Yet, there is little celebration of this economic lifeline compared to the fanfare surrounding IMF deals.
The Burden on the Common Citizen
The consequences of this continued reliance on external debt are clear: the burden ultimately falls on the salaried class and low-income groups. The government’s tax collection has reportedly surpassed IMF expectations, with a commitment to maintaining a Rs. 12.3 trillion tax target for FY25. However, this means increased pressure on taxpayers, while systemic inefficiencies, corruption, and lack of structural reforms continue to drain the economy.
The IMF’s involvement is not a sign of progress but rather an indication of persistent economic fragility. Pakistan has been in and out of IMF programs for decades, and each time, the loans serve only to keep the country afloat rather than propel it forward. This latest bailout will likely be spent on interest payments and short-term fiscal management rather than genuine economic development.
Is Pakistan a Global Ponzi Scheme?
Critics on social media have dubbed Pakistan’s economy a Ponzi scheme, where money is continually borrowed to pay off previous loans, with little to no real economic progress. While this may sound harsh, the argument is not without merit. The cycle of borrowing, repaying interest, and then borrowing again has left Pakistan in a perpetual state of economic insecurity.
Rather than celebrating IMF bailouts, Pakistan needs to shift its focus toward long-term economic strategies. Industrialization, export-led growth, financial discipline, and self-reliance should be the real milestones we aim for. Until then, every so-called “economic achievement” tied to external debt will remain nothing more than a mirage, delaying but not solving the country’s fiscal crisis.
The Way Forward
Pakistan must break this cycle of dependency. Sustainable economic growth requires:
- Structural Reforms: Addressing corruption, inefficiencies, and weak governance.
- Industrial Expansion: Encouraging local manufacturing and reducing import dependency.
- Export Growth: Developing sectors that can compete in the global market.
- Investment in Human Capital: Strengthening education, innovation, and entrepreneurship.
- Reducing Foreign Dependence: Prioritizing self-sustaining economic policies over reliance on international loans.
The hope is that this IMF program will help Pakistan stabilize its finances and reduce its reliance on foreign lenders. However, unless the government undertakes real economic reforms, this bailout will be just another step in a never-ending cycle. The real question remains: When will Pakistan start celebrating self-reliance over survival?
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