Many people query why Pakistan continually requesting financial assistance from the International Monetary Fund (IMF). We are obviously dependent on the tough love provided by the Fund, as evidenced by the staggering total of 23 programmes. Actuality, we are the IMF's most devoted client of IMF. Argentina is second with 21 programmes. Our Nocturnal twin India, in contrast, has only visited the IMF seven times.
That is not a good way to run a nation to run to the international emergency ward 23 times in 75 years. In order to make it as clear as possible, this article seeks to explain why Pakistan has never been able to wean itself off the IMF.
If a country's foreign exchange reserves are low, it normally turns to the IMF for assistance.The country's foreign exchange reserves are used to cover import costs and repay loans obtained from outside sources, such as other nations, multilateral institutions like the IMF and World Bank, and foreign nationals.
There are two ways a nation might increase its foreign exchange reserves.It can first achieve this by maintaining a current account surplus, which occurs when exports plus remittances are more than imports. Second, even if it has a current account deficit (the opposite of a surplus), it can still increase its reserve position by luring inflows of foreign money in the form of debt or equity that are greater than the current account deficit.
The state of a nation's current account essentially indicates how much it invests and saves.A nation that invests heavily generally needs money from overseas and has a current account deficit as a result.
