The statement by the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, expressing confidence that Pakistan will not default, is certainly promising and welcome. Over the past few years, Pakistan has faced economic challenges due to discontinuity in economic policies, the global Covid-19 pandemic, nationwide floods, the Russia-Ukraine conflict, and previous agreements with the IMF on stringent terms, all of which have exposed the country to serious economic crises. In light of these challenges, there was a general impression that Pakistan would not be able to avoid bankruptcy. The IMF’s insistence on early implementation of its strict conditions exacerbated the inflationary pressure, while the reluctance of other financial institutions and friendly countries to provide financial cooperation before the agreement with the IMF further hindered the country’s recovery.
Under these circumstances, there was always a fear that Pakistan could be declared bankrupt at any moment. However, at the spring meeting of the IMF and the World Bank, the Managing Director’s clear announcement has shown that Pakistan’s continuous struggle to implement sound economic strategies has paid off, and the country has emerged from the danger zone. Georgieva stated in a press conference that the IMF is seeking confirmation from international partners to meet Pakistan’s financing gap needs. She also clarified that although there is no immediate fear of Pakistan’s bankruptcy, the country needs a sustainable policy framework to avoid such risks. An agreed national economic strategy must be formulated to ensure lasting improvements in the situation, instead of building new buildings every time a new government comes into power.