Pakistan's bailout addiction: Why the IMF keeps saving a sinking economy
'A country that runs on borrowed money and borrowed time eventually runs out of both.'That line could well serve as the preface to Pakistan's economic story. Since joining the International Monetary Fund (IMF) in 1950, the country has entered into no fewer than 25 loan programs.In May 2025, Islamabad secured its latest lifeline: a $1 billion disbursement under the IMF's Extended Fund Facility (EFF), part of a broader $7 billion package. Yet, it remains stuck in a self-defeating cycle, perennially at the edge of default, its economy weighed down by debt, dysfunction, and dangerous dependencies.advertisementCULTURE OF CRISIS, PARALYSIS OF REFORM
Pakistan's economic malaise is not an accident. What began as a post-independence promise quickly curdled into chronic mismanagement. A toxic mix of military overreach, poor planning, and an import-heavy growth model has left its fiscal core hollow and its institutions weak.By end-2024, Pakistan's external debt had ballooned to over $133 billion, which is more than a third of its GDP. Interest payments alone devour 43% of federal revenues. Its foreign exchange reserves are also dwindling. And with over $26 billion in repayments looming in 2025–26, Pakistan's economic troubles are far from over.The structural problems are equally grim. The tax-to-GDP ratio hovers at a dismal 9.2%, one of the lowest globally, with agriculture and retail—major components of the economy—largely outside the tax net. Growth remains anaemic: agriculture expanded just 0.9% in the first half of FY25; industry shrank 0.4%.advertisementThe country's GDP growth for FY25 stood at 2.68%, similar to what the IMF projected, but less than its government's target of 3.6%. Moreover, the World Bank has flagged rising poverty and food insecurity, warning that 10 million Pakistanis face acute hunger this year.The World Bank also labelled Pakistan's growth model, marked by high public consumption, low productivity, and heavy borrowing, as unsustainable.The military's entrenched role in the economy further complicates reform. Its business empire, accounting for 5-10% of GDP, remains mostly untaxed, while new investment decisions now flow through the military-led Special Investment Facilitation Council (SIFC).PAKISTAN'S BAILOUT ECONOMYIndia has taken sharp note of Pakistan's pattern. Since 1989, Pakistan has received IMF disbursements in 28 of 35 years. Four programs in just the last five. 'If previous packages worked,' New Delhi asked, 'why is Pakistan always back at the table?'The frequency, India argues, raises uncomfortable questions—either about the IMF's monitoring, or Islamabad's credibility as a reformer. Or both.India also flagged the role of Pakistan's military, citing a 2021 UN report that called the army-linked corporate empire the country's largest conglomerate. That influence has only grown under the SIFC, which now shapes investment strategy and policy decisions.advertisementBut India's sharpest criticism is moral. It warned that repeated bailouts—absent accountability—risk enabling cross-border terrorism.In its submission, India cited the IMF's own Evaluation Report on Prolonged Use of IMF Resources, which acknowledged perceptions that political factors often guide Pakistan's access to funds.'Rewarding continued sponsorship of cross-border terrorism sends a dangerous message to the global community, exposes funding agencies and donors to reputational risks, and makes a mockery of global values,' India said.The IMF, constrained by protocol, stopped short of addressing those moral concerns directly. But it did take note of India's abstention from the vote.NO MORE EASY BAILOUTSThis time, however, the IMF isn't writing blank cheques. The Staff-Level Agreement, released on May 17, outlines the Fund's most stringent conditions yet. Beyond macroeconomic reforms, it calls for politically explosive measures: taxing agricultural income, expanding the GST net, slashing power subsidies, restructuring state-owned enterprises, and enforcing anti-money laundering (AML) laws.It also demands action on water governance and climate resilience, marking a shift towards holistic reform. These demands directly target Pakistan's most entrenched interest groups: feudal landlords, trader lobbies, and the military-industrial complex.For perhaps the first time, the IMF isn't just asking Islamabad to manage numbers, but to confront its own power structure.advertisementPakistan now faces its hardest truth: the world is still bailing, but it keeps sinking. Unless Islamabad ends its twin addictions to borrowed money and ideological extremism, it will not just default on loans. It will default on the very promise of stability and prosperity for its people.Whether Pakistan embraces reform or retreats into old habits will determine if its future lies in genuine recovery, or if the hopes of its economy will forever rest on bailouts.Must Watch
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Last Updated: Unless Pakistanis demand accountability from the establishment, their nation will remain ensnared in a cycle of self-deception, mistaking every backward step for progress Pakistan has long been characterised by contradictions, and its leadership has once again veered into the realm of performative patriotism. On this occasion, however, they have gone beyond their usual reliance on rhetoric or censorship, choosing instead to officially commemorate what is widely regarded as a strategic failure in the recent military standoff with India, following the latter's Operation Sindoor, which struck militant infrastructure and military targets without reprisal. On 13 May, the Shehbaz Sharif administration announced a new national holiday, Youm-e-Markaz-e-Haq (Day of the Battle for Truth), to be observed annually on 10 May — not to mark a victory, but what officials framed as a moral success over India, despite experiencing significant military losses during the four-day conflict. The circumstances surrounding this newly instituted national 'day of valour" are far from obscure. Between 6-7 and 10 May, South Asia experienced an escalation of armed conflict between India and Pakistan. In response to the Pahalgam massacre, in which 26 Indian civilians were killed by Pakistan-backed Lashkar-e-Toiba militants on 22 April, India undertook Operation Sindoor during the night of 6–7 May, aiming to demonstrate deterrence and punitive intent. The operation targeted no fewer than nine locations housing militant infrastructure and training camps across the Line of Control and within Pakistani territory. Independent analysts and satellite imagery have substantiated India's precision strikes on terror-related logistics. In retaliation, Pakistan's military launched its own Operation Bunyan Marsoos on 10 May, which included drone swarm offensives; however, all were effectively neutralised by India's Air Defence Systems, which intercepted and destroyed dozens of Turkish-made drones in large numbers. In a significant escalation, Indian armed forces targeted at least nine Pakistan Air Force (PAF) bases, extending across the country from the Nur Khan airbase near Islamabad/Rawalpindi to Rahim Yar Khan, Sukkur, Chunian, Pasrur, and Sialkot, among others. With several airbases rendered largely inoperative, Islamabad was compelled to pursue de-escalation through Director General of Military Operations (DGMO)-level dialogue by the evening of 10 May. However, the DG-ISPR, the media arm of Pakistan's Armed Forces, reverted to its well-established narrative strategy by asserting that a 'befitting reply" had been delivered to India's precision strikes, despite clear evidence to the contrary. Such rhetoric has become a defining feature of the military's public relations discourse. Despite professing a commitment to transparency, the Pakistani establishment—along with its civilian front—has once again avoided offering genuine openness or accountability. Instead, Prime Minister Shehbaz Sharif capitulated to the military establishment's every exaggerated demand, aligning himself with its mythmaking apparatus. As part of these symbolic gestures, on 13 May, PM Sharif proclaimed that 10 May would henceforth be observed annually as Youm-e-Marka-e-Haq (Day of the Battle for Truth), in a show of support for the Pakistani armed forces. Furthermore, the government extended this orchestrated display by designating 16 May as Youm-e-Tashakur (Day of Gratitude), ostensibly to express thanks to divine forces for safeguarding the nation. Even more notably, General Asim Munir, the current Army Chief, was conferred the rare military rank of Field Marshal, becoming only the second Pakistan Army General to receive this title since General Ayub Khan in 1959. This elevation is symbolic rather than operational, reflecting more the military's intent to project strength than any substantive achievement on the battlefield. However, these recent developments provide insight into the broader pattern whereby the Pakistani state—especially its military establishment—routinely transforms setbacks into celebrations to uphold its legitimacy. In the process, it not only actively reshapes historical narratives in real time but also employs national holidays as instruments of diversion and morale control. The strategy itself dates back several decades. In 1965, Pakistan launched Operation Gibraltar, aiming to provoke an uprising in Jammu and Kashmir by infiltrating regular army troops. The operation, however, ended in failure, triggering the full-scale Indo-Pak War of 1965. Ultimately, Pakistan ceded more territory than it gained and was compelled to agree to a ceasefire through the Tashkent Agreement of 1966. Nevertheless, each year on 6 September, the country observes Defence Day—a solemn patriotic occasion featuring military parades and speeches glorifying Pakistan's alleged martial superiority. In 1999, Pakistani forces unlawfully crossed the Line of Control and seized strategic mountain positions in the Kargil region. The operation, carried out without civilian government approval, led to the deaths of hundreds of Pakistani soldiers as India launched a counteroffensive to retake the area. Nevertheless, General Pervez Musharraf—the architect of the Kargil debacle, appointed Army Chief by Nawaz Sharif after bypassing two senior officers only months earlier—soon assumed control through a military coup. Even today, Kargil is remembered in segments of Pakistan's national narrative not as a failure, but as a bold display of military ingenuity. What remains consistent across these episodes is the deliberate reconfiguration of national memory. Military defeats are recast as stories of resistance, while tactical blunders are reframed as moral triumphs. This extends beyond mere propaganda; it represents a sustained strategy of narrative management that shields the military from accountability and ensures the civilian government remains subordinate to the armed forces' entrenched authority. By designating 10 May as Youm-e-Markaz-e-Haq, the state is not merely revising the narrative of a military confrontation but is also proactively undermining dissent, stifling debate, and conditioning future generations to prioritise myth over reality. Educational institutions will present it as a moment of national victory, much like the portrayal of Operation Gibraltar. Any critiques highlighting strategic failures or the true economic, diplomatic, and military costs are likely to be marginalised or suppressed. The utility of these contrived holidays is multifaceted. Firstly, they offer a cathartic release for a population grappling with economic hardship, political turmoil, and international isolation. In a nation beset by soaring inflation, a depreciating rupee, and frequent IMF bailouts, mythologised nationalism provides an inexpensive form of escapism that discourages critical inquiry. Secondly, such observances function as tests of loyalty. By requiring public participation in the commemoration of fabricated victories, the state fosters an environment where patriotism becomes performative and dissent is deemed perilous. Thirdly, and arguably most cynically, these holidays reinforce the military's hold over national identity. While in most democracies national holidays commemorate independence, revolution, civil rights, or peace, Pakistan's calendar is increasingly dominated by observances that glorify the military's role as protector and guardian, despite historical evidence to the contrary. These occasions are not simply commemorations but tools of militarised nationalism, deliberately crafted to obscure inconvenient realities. While every nation possesses its own symbols and moments of unity can be vital, when these symbols are founded on falsehoods and unity rests upon denial, the outcome is not strength but stagnation. Consequently, the Pakistani establishment is offering its population triumphalism and a continuous stream of delusion rather than the truthful account to which they are entitled. top videos View all Moving forward, although Youm-e-Markaz-e-Haq will likely be observed with parades, speeches, and patriotic songs, behind the flags and slogans lies the reality of a state regressing—where defeats are recast as triumphs, and history is rewritten not by scholars but by military leaders. Unless Pakistanis demand accountability from the establishment, their nation will remain ensnared in a cycle of self-deception, mistaking every backward step for progress. The writer is an author and a columnist. His X handle is @ArunAnandLive. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect News18's views. tags : Asim Munir Operation Sindoor pakistan Location : New Delhi, India, India First Published: June 06, 2025, 16:37 IST News opinion Global Watch | Marching In Reverse: How Pakistan Celebrates Defeats As 'National Holidays'
