Ahmed and Sana Rehman sit together in their Rawalpindi flat, watching the evening news. The anchor announces that Pakistan has completed another review of its IMF programme. Their teenage son looks up from his phone: “Baba, what is the IMF? Why do we keep borrowing from them? And why does electricity cost more every month?” Ahmed pauses. He knows the IMF matters — he can feel it in his utility bills and in the price of flour at the kiryana store. But he cannot explain it. Most Pakistanis cannot.

This article is for Ahmed, Sana, and every Pakistani who senses that the IMF shapes their daily life but has never been shown exactly how, or why, or what it would take to change.

What is the IMF?

The International Monetary Fund is a Washington-based institution owned by 190 member countries. It was created in 1944 to prevent the kind of economic collapse that had devastated the world in the 1930s. Its core job is to act as a lender of last resort — a global financial emergency service — for countries that run out of foreign currency and cannot pay their international bills.

When a country’s foreign exchange reserves (the stock of dollars, euros, and other currencies held by its central bank) fall so low that it cannot pay for imports or service its external debts, the IMF steps in with a loan. The loan comes with conditions: the country must agree to specific economic reforms designed to address the root cause of the crisis. Think of it as an emergency loan from a strict bank that insists you change your spending habits before it releases the money.

The IMF is neither a charity nor a villain. It is a creditor with rules — and Pakistan is one of its most frequent clients.

Why does Pakistan keep going to the IMF? — 23 times and counting

Pakistan has entered 23 IMF loan programmes since its first in 1958, when General Ayub Khan secured a modest $25,000 standby arrangement. Since then, governments of every stripe — military, civilian, left, right — have returned to the Fund roughly every three to five years. Pakistan has earned a bleak distinction in economic literature: analysts call it a “one-tranche nation,” meaning it has a pattern of securing IMF loans at moments of acute crisis and then abandoning the reform programme before completion, only to return when the next crisis hits.

Why does this cycle repeat? The core answer is structural. Pakistan consistently spends more foreign currency than it earns — importing oil, machinery, and food while its exports, dominated by textiles, cannot keep pace. Its tax base is narrow: before recent reforms, the tax-to-GDP ratio (the share of national income collected as taxes) sat below 9%, among the lowest in the world for an economy of Pakistan’s size. Low taxes mean insufficient government revenue, which means borrowing, which means debt, which eventually means a balance-of-payments crisis — the moment when the country simply cannot pay its foreign obligations. At that point, the IMF is the only door left open.

At least 15 of Pakistan’s 23 IMF programmes have coincided with global oil price shocks, reflecting a chronic vulnerability: an energy-import-dependent economy exposed to every tremor in international commodity markets.

What does the IMF give Pakistan?

The most recent programme — a 37-month Extended Fund Facility (EFF), a longer-term arrangement designed to support deeper structural reforms rather than just emergency stabilisation — was approved by the IMF’s Executive Board on September 25, 2024. It is worth approximately $7 billion in total, disbursed in tranches (instalments) linked to Pakistan meeting agreed targets at regular reviews.

By December 2025, Pakistan had received $1.2 billion under the combined EFF and a parallel Resilience and Sustainability Facility (RSF), a newer instrument designed to help countries manage climate-related economic risks. Gross foreign exchange reserves at the SBP reached $16 billion by end-2025, well above the programme’s minimum targets — a meaningful improvement from the near-depleted $4.5 billion in June 2023.

What does the IMF ask in return?

Every IMF programme comes with conditionality — specific, measurable commitments the borrowing country must meet at each review before the next tranche is released. For Pakistan’s current EFF, the conditions touch almost every part of economic life. The table below shows the most significant ones and their direct effect on ordinary citizens.

Does the IMF help or hurt Pakistan?

This is the honest answer: both, depending on which Pakistani you ask and which time horizon you consider.

The IMF did not create Pakistan’s structural deficits, its narrow tax base, or its energy sector’s dysfunction. But its programmes have, at times, been better at managing crises than at preventing the next one. The responsibility for that failure is shared — and it lies primarily with Pakistan’s own policymakers.

Why can’t Pakistan just say no?

A reasonable question. The answer is mathematics. When foreign exchange reserves fall below the level needed to cover a few weeks of imports, the choice is not between the IMF and independence. It is between the IMF and economic collapse — blocked imports, medicine shortages, halted industrial production, and a rupee in freefall. Pakistan came perilously close to that scenario in 2022–23, when reserves briefly covered barely three weeks of imports and the country’s sovereign bonds traded at distressed levels.

At that point, the alternative to the IMF is not a better deal — it is default. A sovereign default (the failure to repay international debts) would close Pakistan off from international capital markets for years, devastate the banking system, and impose suffering far greater than any IMF conditionality. Argentina’s 2001 default and Sri Lanka’s 2022 crisis offer sobering examples.

Pakistan says no to the IMF only when it has enough reserves or bilateral support to manage without it. It never has that luxury for long.

What needs to change?

The cycle breaks only if Pakistan addresses the underlying causes of its recurring crises rather than treating the symptoms. Three reforms stand above all others.

First, export diversification. Pakistan’s export revenues cannot remain dependent on a single sector. IT exports reached $4.6 billion in FY25, up 44% in a year — a genuine opportunity. But textile dependence must be reduced through investment in manufacturing, agriculture processing, and services over a decade-long horizon.

Second, a sustainable tax base. Pakistan’s tax-to-GDP ratio rose from 9.1% to 10.6% in FY25 under IMF pressure — a meaningful but still inadequate level. The long-term IMF target is 13%, and Pakistan’s own Vision 2025 document aimed for 18%. Bringing the agricultural sector, the retail trade, and the vast informal economy into the tax net requires political will that no foreign institution can supply.

Third, energy sector reform. At least 15 of Pakistan’s 23 IMF programmes were triggered partly by energy-related foreign exchange pressures. The circular debt, at Rs2.4 trillion in 2025, is a slow-motion fiscal crisis. Structural reform — renegotiating independent power producer contracts, reducing transmission losses, and developing indigenous energy sources — is the only lasting solution.

The takeaway

When Ahmed and Sana’s electricity bill arrives next month, it will carry the fingerprints of a decision made in Washington — but also of decisions made, and avoided, in Islamabad over seven decades. The IMF did not choose Pakistan’s energy policy, its tax exemptions for the powerful, or its pattern of abandoning reforms when the immediate pressure eases. Pakistanis and their governments did.

The IMF is a mirror, not a master. It reflects what Pakistan’s economy actually earns, spends, owes, and produces. When that mirror shows an uncomfortable picture, the instinct is to resent the messenger. The more productive response is to understand the structural problems the picture reveals — and to demand from elected representatives the sustained reforms that would, over time, make the next crisis unnecessary.

Twenty-three programmes in 66 years. The 24th need not follow the same script.