Pakistan set to become 4th biggest IMF debtor

Pakistan will become the fourth largest International Monetary Fund (IMF) borrower in the world after receiving additional loans of $3 billion in the next nine months under the standby arrangement from the global lender.

According to the lender’s data, as on March 31, 2023, Pakistan was ranked fifth in the list of countries with the highest borrowing from the IMF.

However, after receiving another $3 billion in the next nine months under the standby arrangement made two days ago, Pakistan will move to the fourth place in this list.

Earlier, in terms of loans from the IMF, Argentina ranked first with $46 billion, Egypt stood at second place with $18 billion, Ukraine came in third with $12.2 billion, Ecuador took the fourth spot with $8.2 billion, and Pakistan was at fifth position with $7.4 billion.

Now with loans worth $10.4 billion, Pakistan will overtake Ecuador to become the world’s fourth-largest IMF borrower.

Also read Crucial $3b IMF lifeline comes with tough conditions

According to the IMF statistics as of March 31 this year, the global lender had issued loans of $155 billion or 115.2 billion special drawing rights (SDRs) to balance the world’s financial position and support weak economies.

This dollar figure was calculated by using IMF data on the value of a SDR on March 31 this year that stood at $1.345.

The SDR is used as a unit of account by the global lender to assess the value of support it extends to its member countries.

Despite there being a total of 93 countries owing it money, the IMF’s top 10 debtors, including Pakistan, still account for the lion’s share 71.7% of the outstanding balance of $155 billion.

Pakistan also holds the “title” of being the largest IMF borrower in the Asian region.

Other Asian countries that borrowed from the IMF, including Sri Lanka, Nepal, Uzbekistan, the Kyrgyz Republic, Armenia (West Asia) and Mongolia, are far behind Pakistan in terms of taking loans from the global lender.

In August 2022, the IMF extended $1.1bn to Pakistan as part of a $6.5bn programme agreed back in July 2019.

Because of the spillovers from the war in Ukraine and domestic challenges, Pakistan faces an acute balance of payments crisis.

Only 19 of the IMF’s member countries have a debt of $1 billion or more.

The high ranking in the list of IMF borrowers calls for sustainable development for Pakistan by pulling the country out of the debt trap instead of trumpeting the approval of a loan from the global lender under the standby arrangement.

An integrated plan should be followed to take Pakistan towards this direction.