Samina Bibi
IMF is a global financial institution established in 1944 to promote international monetary corporation, exchange rate stability and economic growth. Before proceeding further it is important to know that why Pakistan relies on IMF. The reason is that Pakistan is facing balance of payment crises with a critical level of a foreign exchange reserve. Another and most important reason is that Pakistan need loans to fund its external payment obligations including international debt servicing and finance its current account.
Here are some possible short term strategies that we can adopt to reduce the reliance on IMF.
Reduce budget deficit and manage expenses:Pakistan can reduce their extra expenses to balance the budget. Now the question is that how we can reduce our expenses to manage budget deficit. In the explanation of it, here we see the 2023’s import payments of selected items and compare it with 2024’s payments.
(Thousand US dollar)
Imported Items Payments in 2023 Payments in 2024
Dry fruits 7,224 17,623
Tea 422,076 590,660
Spices 92,880 123,437
Table source: State Bank of Pakistan
Here is a massive increase in imports payment from 2023 to 2024. To reduce this dependence on imports Pakistan can cultivate these items within its borders. By the leveraging its fertile land and favorable climate. Through this we can save foreign exchange, generate employment opportunities for farmers, promote agriculture growth and ensure a steady supply of fresh and high quality food items for local consumption.
Let’s take another example of machinery and transport items.
(Thousand US dollar)
Imported Items Payments in 2023 Payments in 2024
Motor cycles 31,184 43,861
Motor Cars 15,563 31,299
Mobile phones 10,620 57,136
Air craft ships and boats 110,377 174,616
Table source: State Bank of Pakistan
To mitigate this substantial import burden can consider inviting these companies to establish manufacturing facilities within the country. Through this import burden can be reduce. These companies will use Pakistani land and labor and produce thing here significantly. Another major benefit of it is to generate employment and promote technological advancement in the country. There are also some other strategies that can be made to reduce reliance on IMF.
Beside this there is a need of increase exports, improvement in export quality, adoption the economic diversification, agricultural modernization, investment in education and skills development, improvement in governance, strengthen the intuitions and promote the regional trade.