Commenting on the news that Pakistan is to request a $7 billion bailout from the IMF, Tim Jones, economist at the Jubilee Debt Campaign said:
“Pakistan has received IMF bailout loans for 33 of the last 46 years. For all that time, almost half a century, the South Asian nation has been in debt crisis. It is time to try something different. IMF loans to pay off previous lenders combined with austerity is a recipe for failure, as the last 46 years have proven. A debt restructuring is needed across all Pakistan’s creditors, to finally give the country a new start.”
Abdul Khaliq from CADTM Pakistan said:
“The Pakistan economy is in a crisis but we do not need a new IMF loan. The conditions would crush poor people. We need debt restructuring from all creditors to give the Pakistan economy a breathing space for a fresh start. Pakistan must learn to live and survive without IMF.
“The new government is repeating the same old mistake of previous governments in pushing the country towards the serious crisis, we are facing today. For a sustainable solution, besides a crackdown on corruption, most important is the accountability of the previous loans. Therefore, we call for an independent parliamentary debt audit commission, to determine what loans were used for, whether the people of Pakistan have benefitted and to help ensure any future loans are used responsibly.”
According to the World Bank and IMF, as of start-2017 54% of Pakistan’s government external debt is owed to multilateral institutions, such as the IMF and World Bank. 29% is owed to other governments such as China. 17% is owed to private lenders.
According to the World Bank, Pakistan’s external government debt payments have averaged 16% of revenue between 1972 and 2017. In 2018 they are predicted to be at least 20% of revenue.
Pakistan was poor and indebted enough to qualify for debt relief through the Heavily Indebted Poor Countries initiative, through which 36 countries had $130 billion of debt cancelled by the IMF, World Bank and governments. However, qualifying criteria were adjusted so it was deliberately excluded because it is a large country, and so debt relief would have cost creditors more money.
IMF bailout loans to Pakistan have been given from 1972 to 1983, 1989, 1991, 1993-2004, 2008-2010, 2013-2016.
For more information on the history of debt in Pakistan see Jubilee Debt Campaign and Islamic Relief briefing ‘Unlocking the chains of debt’