The government of Pakistan has taken the latest decision to say ‘adieu’ to the International Monetary Fund (IMF) program at least for the time being, after the existing $11.3 billion Stand By Arrangement (SBA) program, is to be ended on 30 September 2011.This is the 8th SBA program with the IMF to conclude on an unsuccessful note, since 1950 when Pakistan joined the Fund. Out of these eight programs six were contracted with democratic governments.
Soon after coming into power the current PPP government had secured $11.3 billion IMF program in November 2008 and got disbursements of about $7.6 billion, but since May 2010 the program was suspended when IMF refused to release the remaining $3.7 billion due to non-compliance of the strict criteria, set under the Stand By Agreement. However, the agreement was extended for nine months until 30th September 2011, but disbursements were not resumed owing continuous stand-off between IMF and government of Pakistan. The situation leads Pakistan to ultimately say good bye to the program. The Minister of Finance, Abdul Hafeez Sheikh, in a statement, made it clear on 17 September 2011.
The discontinuation of the program with the IMF has been some time in the making as Pakistan is cut off from IMF and World Bank funding since May 2010.But having kept the IMF at arm’s length for over a year now is anything but good news. However, the widespread belief is that the government wanted to get rid of the IMF imposed conditions, not because of any radical shift in its economic policy, but in the run up to the next general elections, scheduled to be held early 2013.