Debt-trapped Pakistan will become the fourth largest IMF borrower in the world after receiving a fresh loan of USD 3 billion in the next nine months under the standby arrangement reached with the global lender. Pakistan, which is facing its worst economic crisis since independence from Britain in 1947, was on March 31, 2023, ranked fifth in the list of countries with the highest borrowing from the International Monetary Fund (IMF), The Express Tribune newspaper reported, citing the global lender's data.
However, Pakistan will move to the fourth place in this list when it receives another USD 3 billion in the next nine months under the Stand-By Arrangement made with the Washington-based global lender on Thursday. The deal, which still needs to be approved by the IMF'S board, comes after an eight-month delay. Earlier, in terms of loans from the IMF, Argentina ranked first with USD 46 billion, Egypt stood in second place with USD 18 billion, Ukraine came in third with USD 12.2 billion, Ecuador took the fourth spot with USD 8.2 billion, and Pakistan was at fifth position with USD 7.4 billion.
With loans from the global lender worth USD 10.4 billion, Pakistan will overtake Ecuador to become the world's fourth-largest IMF borrower. Cash-strapped Pakistan faces an acute balance of payments crisis because of the spillovers from the war in Ukraine and domestic challenges. Despite a total of 93 countries owing it money, the IMF's top 10 debtors, including Pakistan, still account for the lion's share of 71.7 percent of the outstanding balance of USD 155 billion. Pakistan also holds the "title" of being the largest IMF borrower in the Asian region, according to the report.
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. According to IMF statistics, as of March 31 this year, the global lender had issued loans of USD 155 billion or USD 115.2 billion special drawing rights (SDRs) to balance the world's financial position and support weak economies.
This dollar figure was calculated using IMF data on the value of an SDR on March 31 this year, which stood at USD 1.345. The global lender uses the SDR as a unit of account to assess the value of support it extends to its member countries. In August 2022, the IMF extended USD 1.1 billion to Pakistan as part of a USD 6.5 billion programme agreed back in July 2019. Only 19 of the IMF's member countries have a USD 1 billion or more debt, the report said.
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 stand-by arrangement. An integrated plan should be followed to take Pakistan towards this direction, the report said. The USD 3 billion funding under the SBA, spread over nine months, is higher than expected for Pakistan. The country was awaiting the release of the remaining USD 2.5 billion from a USD 6.5 billion bailout package agreed in 2019, which expired on June 30.
Pakistan's economy has been in a free fall mode for the last many years, bringing untold pressure on the poor masses in the form of unchecked inflation, making it almost impossible for a vast number of people to make ends meet. It has faced several challenges in recent times, including devastating floods last year and commodity price hikes following the war in Ukraine. Over 1,500 people were killed last year during floods in Pakistan that destroyed millions of homes, wiped out swathes of farmland, and caused billions of dollars in economic losses.
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