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The paper attempt to find out causes and consequences of the adoption and implementation of IMF programmes since 1988. Basically Pakistan singed different agreements with IMF to improve its economy through the adjustment of monetary and fiscal policy during the decade of 1990's. The in-depth analysis of Structural Adjustment Program shows that IMF policies totally failed to bring any macroeconomic stability. Instead they contributed towards worsening of the economic situation, with dire consequences for vulnerable sections of society besides producing negative effects for the political system, resulting in the breakdown of nascent democratic system again and again. The primary reason for the negative effects is attributed to inflationary nature of structural adjustment programmes. The attempt to control demand thorough demand deflation by forcing the recipient country to devalue currency, increase interest rates, withdraw subsidy and adopt austerity measures through down-sizing and cutting expenditure on unproductive sectors of economy and sell public sectors enterprises to the private sector. Such an approach of IMF has contributed to the closure of industry and business, giving rise to scourge of unemployment and inflation.
Keywords: IMF, Pakistan 's economy, monetary and fiscal policy
Introduction
Pakistan's economy was in precarious condition during 1988-2002. Some economists called this period "lost decade of development" due to the fact that the country was hit by political instability, institutional decay, financial indiscipline, soaring fiscal deficit, low level of revenue generation and growing mis-utilization of resources A as result, economy was thrown into deep waters of insolvency and bankruptcy. The growing dependence on external borrowings made Pakistan reliant on aid from the US, Western countries and international financial institutions like the IMF and World Bank. In an effort to rehabilitate its economy and address the issue of balance of payment, Pakistan accepted an IMF structural adjustment programme in 1988 under which it accepted raft of conditionalities.
Pakistan formally signed SAP with IMF in 1988 but the history goes back to the early years of Pakistan. It joined IMF in July 1950 and the government of Pakistan approached IMF formally in 1958, requesting for SDR 25 million under Standby arrangement for ten months. But this loan was cancelled. During 1960s, two more Standby arrangements were made; first in 1965 and the second in 1968. In...