End IMF reliance, global crunch may limit its help

Pakistan should aim to make its ongoing International Monetary Fund (IMF) programme the last one, as the global lender may soon be overwhelmed by demand from struggling economies amid tightening global liquidity.

Eric Robertsen, Global Head of Research and Chief Strategist at Standard Chartered Bank, while speaking at a media roundtable, said the world's "plentiful liquidity" phase is nearing an end, and as financial conditions tighten, more and more countries will turn to the IMF for assistance. However, the institution's limited capacity means it will not be able to support everyone.

"As the liquidity environment tightens, you will see more and more countries going to the IMF," he said. "The reality is that the IMF has limited resources. We keep telling sovereign clients — take advantage of the plentiful liquidity while it's there. Do everything you can to strengthen your fiscal position, because when the environment becomes less friendly, there's going to be a queue at the IMF, and the Fund will not be able to support everybody."

The Standard Chartered strategist observed that emerging markets (EMs) have enjoyed a rare period of financial calm despite geopolitical turbulence. He attributed this paradox to over 300 central bank rate cuts globally in the past two years, which have flooded the world economy with liquidity. "Financial markets are experiencing calm amid chaos," he said. "Even as geopolitical risks multiply, asset prices, from equities to gold and crypto, are soaring because liquidity is abundant."

Also addressing the session, Rehan Shaikh, Chief Executive Officer of Standard Chartered Bank (Pakistan), stressed the need for Pakistan to take ownership of its economic reform agenda rather than depending on IMF prescriptions. "It should be a Pakistan programme, not an IMF programme," Shaikh remarked. "The IMF can come and tell you to reduce expenses, generate more income, or expand what you're doing, but if we keep doing that mechanically, it only puts us into boom-and-bust cycles every five to seven years. That's not sustainable."

He said Pakistan's renewed fiscal discipline and the government's commitment to reforms are encouraging, adding that the banking sector is already seeing signs of revived confidence. "The market is opening up. We are seeing more and more Middle Eastern banks, Asian Development Bank (ADB), International Finance Corporation (IFC), and the World Bank all coming back—and hopefully, this momentum will continue to work in Pakistan's favour," Shaikh added.

Robertsen said the world is witnessing a rewiring of globalisation rather than deglobalisation, with trade shifting from East-West to EM-EM routes connecting Asia, the Middle East, and Africa. He also warned that China's economic slowdown is exporting deflation globally. "China's excess capacity is pushing down prices for goods such as EVs and solar panels," he said. "That benefits importers like Pakistan, but it squeezes local manufacturers."

He forecast that Pakistan's GDP could grow 3.5-4% in FY2025-26, with inflation likely easing into single digits if policy consistency continues. Still, he cautioned that much of Pakistan's current stability reflects external liquidity, not deep-rooted structural reform.

"The real question is how much of Pakistan's improvement is due to its own policies, and how much to global liquidity sloshing around," he said. Policymakers should prepare for a world where liquidity costs more and capital becomes selective.

Robertsen dismissed talk of "de-dollarisation," saying the greenback remains the backbone of global finance. Central banks may be diversifying, but their absolute dollar holdings have risen, not fallen, he said. He described oil near $65 per barrel as a "neutral zone" but warned that supply shocks or new geopolitical tensions could trigger volatility. Standard Chartered projects global growth near 3% in 2026, led by the United States and a strong 5% expansion across ASEAN economies.

"This calm won't last forever," Robertsen said. "Liquidity abundance can flip overnight. Pakistan and other emerging markets need to build resilience now, because when the tide turns, only those with strong fundamentals will stay afloat."