1. Pakistan is one of the most prolonged users of
IMF resources and has been under IMF-supported
programs almost continuously since the late 1980s.
2. This report aims to cast light on what succes-
sive IMF-supported programs achieved and failed to
deliver and on the factors underlying their limited
success.1 In particular, two such factors, which ap-
pear to have been critical in the Pakistan case, are
analyzed in depth, namely (i) program design and
implementation problems; and (ii) internal IMF gov-
ernance issues affecting the rationale for IMF in-
volvement, the effectiveness of surveillance, and the
program design itself. The report concludes by high-
lighting a few key lessons from this experience and
outlining suggested remedies.2
3. This evaluation was conducted based on (i) re-
views of IMF staff reports and internal documents
(including mission briefs, internal review comments,
and selected technical assistance reports); (ii) inter-
views with IMF staff, a broad range of Pakistani
stakeholders, and staff of the World Bank;3 (iii) a
survey of relevant academic literature; and (iv) inde-
pendent work commissioned by the IEO from the
Center for Development Research at the University
of Bonn (Appendix 1).
Pakistan’s Prolonged UFR Experience
Points to a Limited Effectiveness of Its
IMF-Supported Programs
4. Pakistan’s economic history over the last 30
years can be subdivided in two periods. From 1970
to the late 1980s, Pakistan enjoyed an impressive
growth performance (6–7 percent a year on average).
Fiscal and external imbalances were large during
most of that period, but unlike in many other devel-
oping countries, they did not lead to hyperinflation
or to a debt crisis, which led Pakistan to be some-
times referred to as a “development puzzle.”4 How-
ever, the picture deteriorated markedly from the late
1980s onward, as growth faltered and the continued
failure to rein in the fiscal and current account
deficits led the debt—which had been accumulating
for over two decades—to become unsustainable.
Pakista