Economists Nadeem ul Haque and Shahid Kardar argue that Pakistan’s repeated reliance on the International Monetary Fund (IMF) is not the result of a lack of ideas, but of deep-rooted structural flaws in the country’s economic system that continue to generate balance-of-payments crises.
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In an opinion piece, the authors contend that official discussions on “exiting the IMF” often rely on slogans such as boosting exports, improving human capital and strengthening governance, without identifying the concrete policy actions required to achieve these goals. They maintain that aspirations are frequently confused with instruments, while outcomes are mistakenly presented as reforms.
According to the authors, Pakistan returns to the IMF because its political economy rewards rent-seeking, restricts competition, distorts energy prices, discourages exports and relies heavily on discretionary decision-making rather than predictable rules. As a result, foreign exchange earnings remain weak, fiscal deficits are financed unsustainably, and credibility in global capital markets collapses.
They identify three conditions that typically trigger IMF intervention: inadequate growth in foreign exchange earnings, deficit financing through money creation or excessive borrowing, and a loss of market confidence. These, they argue, are structural and recurring problems rather than temporary shocks.
The authors stress that reform must begin with the energy sector, which they describe as a consistent source of IMF programme failures. They argue that Pakistan’s energy crisis stems from poor pricing, governance failures and institutional fragmentation, leading to circular debt and distorted investment signals. They call for transparent, cost-reflective tariffs, automatic adjustment mechanisms and stronger accountability for utility companies, with targeted cash transfers used to protect vulnerable consumers.
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Tax reform is identified as another critical area. The authors criticise Pakistan’s complex, inequitable and enforcement-heavy tax system, arguing that it discourages formalisation and investment. They advocate a simple, predictable and broad-based tax structure that penalises privilege and non-compliance rather than productivity.
They conclude that Pakistan can only exit the IMF by dismantling the domestic systems that repeatedly recreate economic crises.