Zafar Masud says IMF Programs are designed for stabilization, not for growth

A recent analysis of Pakistan’s economic situation written by Nasir Jamal and published in Dawn News discusses the country’s reliance on IMF programs bailouts and the need for domestic reforms. In the article Mr. Nasir quotes Mr. Zafar Masud, president and CEO of the Bank of Punjab, Finance Minister Muhammad Aurangzeb, Aisha Ghaus Pasha, former state minister for finance, Ahmed Kamal, one of the top textile and clothing exporters, and Prime Minister Shehbaz Sharif.

IMF Programs

The article argues that these bailouts are not a solution and only create more problems in the long term. Pakistan’s economic issues are caused by a lack of substantial reforms and years of financial mismanagement. The IMF programs focus on short-term stabilization, not growth. Many experts believe that Pakistan needs to focus on domestic reforms to achieve sustainable economic growth.

Nasir Jamal in his analysis delves into Pakistan’s chronic issue of fending off economic crises with IMF bailouts, arguing that these temporary fixes come at a hefty price. The reliance on IMF loans, according to Jamal, hinders long-term growth due to a lack of substantial domestic reforms. Years of mismanagement have placed Pakistan in a precarious situation, vulnerable to external shocks and heavily reliant on short-term solutions. The IMF programs, designed for immediate stabilization, fail to address the root causes of Pakistan’s problems, like a weak fiscal position and an unsustainable debt structure.

Zafar Masud, president of the Bank of Punjab, acknowledges the near certainty of another IMF programs but emphasizes it’s not a path to long-term success. Real progress hinges on Pakistan undertaking domestic reforms that address its core problems.

Masud proposes a wider, more equitable tax net and suggests potentially integrating the informal economy into the formal sector through digitization. However, he acknowledges the necessity of strong political will to implement these potentially unpopular yet necessary corrective actions. He finds hope in the appointment of Finance Minister Muhammad Aurangzeb, praising his competence and potential to resist political pressure.

Read More: Mr. Zafar Masud on IMF Interest Rates

Others like Aisha Ghaus Pasha, a former finance minister, and Ahmed Kamal, a leading textile exporter, echo the need for reforms. They believe the current government, with its strong majority and presumed military backing, is well-placed to enact these changes. Pasha emphasizes that without reforms, Pakistan will remain trapped in a cycle of economic booms and busts, regardless of how many IMF programs and bailouts it receives. Kamal is more bullish on the economy, crediting the new government’s leadership and its potential to improve Pakistan’s image on the global stage. He believes a positive perception will attract foreign investment, fueling economic growth.

The article concludes with a sense of urgency. Prime Minister Shehbaz Sharif acknowledges the severity of the situation and emphasizes the need for deep, structural reforms – a “surgical operation” as he terms it. Pasha believes the current government has a unique opportunity to implement these reforms due to its strong political mandate. She questions if this isn’t the perfect time to break the cycle of reliance on temporary fixes and finally place Pakistan on a path of sustainable growth.

The article doesn’t offer definitive answers but highlights the crucial role of political will in enacting the difficult but necessary reforms for a healthier Pakistani economy. It leaves the reader pondering if the current government has the resolve to break the cycle and usher in an era of domestic reform.

Read the full article here:

Zafar Masud’s Perspective on Moving Beyond IMF Programs

Zafar Masud, president and CEO of the Bank of Punjab, adopts a critical stance regarding Pakistan’s overreliance on IMF bailouts. While acknowledging the potential short-term necessity of another IMF programs, Masud argues that these interventions represent impermanent fixes that fail to address the root causes hindering sustainable economic growth.

Focus on Domestic Reforms rather than IMF Programs

Masud contends that genuine progress hinges on implementing domestic reforms that target Pakistan’s core economic vulnerabilities. These reforms should address structural issues such as the nation’s weak fiscal position and the unsustainable debt structure.

This article by Zafar Masud written back in 2018 discusses the ineffectiveness of devaluation of Pakistani Rupee and interest rate hikes as economic solutions. These methods are seen as temporary fixes without addressing the root causes of the problems.

He uses the analogy of cleaning up Empress Market. While the clean-up itself was successful, the lack of a permanent solution for the displaced vendors allows them to return, rendering the effort pointless.

Similarly, devaluation and interest rate hikes are seen as short-term solutions without addressing underlying structural issues. The article criticizes the reliance on a “template” approach from institutions like IMF and IMF programs, which prescribes these methods without considering Pakistan’s specific situation.

The author argues that Pakistan’s currency movement is not purely market-driven and that the decision to devalue is often based on external pressures. They propose that instead of devaluation and interest rate hikes, the government should focus on difficult structural reforms for long-term economic health.

The article concludes by suggesting that the government commission an independent assessment of the situation instead of relying solely on internal resources or IMF advice conditional on the IMF programs. The author emphasizes the importance of prioritizing structural reforms over temporary fixes like devaluation and interest rate hikes.

Specific Policy Proposals

Masud prescribes a two-pronged approach to achieve fiscal stability and economic growth. Firstly, he advocates for the expansion and implementation of a more equitable tax net. This would broaden the tax base and generate much-needed government revenue. Secondly, Masud proposes the potential integration of the informal economy into the formal sector through digitization. This would not only capture currently untaxed economic activity but also foster transparency and financial inclusion.

The Challenge of Political Will

Masud acknowledges the inherent difficulty in enacting these reforms due to their potentially unpopular nature. However, he expresses cautious optimism regarding the recent appointment of a competent finance minister with the perceived fortitude to resist political pressure and prioritize long-term economic well-being.


In essence, Zafar Masud underscores the critical need for Pakistan to transition from a reliance on temporary IMF programs and interventions to a focus on implementing domestically driven reforms. These reforms, while potentially challenging from a political standpoint, are essential for achieving sustainable economic growth and long-term financial stability.

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