Public Finance International Financial Institutions
1. International financial institutions are organizations that
provide financial services and support for international
trade and economic development
Public Finance
By: Rizwan Ahmed
2. Talha Ejaz BS(ADP)-IAS- 80 -S-F21
Rizwan Ahmed BS(ADP)-IAS- 81 -S-F21
Muhammad Numan BS(ADP)-IAS- 82 -S-F21
Qamar Abbas BS(ADP)-IAS- 50 -S-F21
Umer Abdul Hanan BS(ADP)-IAS- 26 -S-F21
3. • Financial Services and Support for International Trade and
Economic Development. Examples include the International
Monetary Fund (IMF), the World Bank and the Asian
Development Bank (ADB). These institutions typically
provide loans and other forms of financial assistance to
governments and private companies, as well as offer advice
on economic policy and trade. They are usually owned and
funded by member countries, and their operations are guided
by agreements and policies established by member
governments.
4. World Bank:
Founded in 1944, Originally, its loans helped rebuild countries
devastated by World War II. in 1960 they shift toward the eradication of
poverty. long-standing relationships with more than 180 member Today
the Bank Group’s work touches nearly every sector that is important to
fighting poverty, supporting economic growth, and ensuring sustainable
gains in the quality of people’s lives in developing countries. critical
issues like climate change, pandemics, and forced migration, the Bank
Group plays a leading role World Bank worked to help more than 100
developing countries by offering loans and tailored knowledge and
advice. All of these efforts support the Bank Group’s twin goals of
ending extreme poverty by 2030 . They raises money for development
at the lowest rates by tapping the world’s capital markets. World Bank's
operational costs are covered through income earned from investments
of undisbursed loans. Pakistan has been a member of the World Bank
since 1950.
5. International Monetary Fund (IMF):
• Established in 1944 has around 189 member countries. provide resources to member
countries in need of financial assistance. IMF's primary role is to ensure the stability of
the international monetary system. IMF's resources mainly come from the money that
countries pay as their capital subscription (quotas) when they become members. IMF
staff are primarily economists with wide experience in macroeconomic and financial
policies. quota of Pakistan in IMF according to 2021 is $1.4 Billion. Argentina is the
biggest debtor to the IMF debt of $42.2B.2, Egypt $17B3, Ukraine $9B4, Pakistan $7.5B
or so Pakistan has been a member of the International Monetary Fund (IMF) in 1950.
• What areas do the IMF and World Bank collaborate on?
• Financial Stability: Financial Sector Assessment Program Heavily Indebted Poor
Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI).
• Climate Change :
• Climate Change Policy Assessments (CCPA)
6. Asian Development Bank:
Established in the early 1960s A resolution passed at the
first Ministerial Conference on Asian Economic
Cooperation, ADB focused much of its assistance on food
production and rural development. raises funds through
bond issues on the world's capital markets. It also relies
on members' contributions. Pakistan became a member of
the Asian Development Bank (ADB) when it was
established in 1966.
7. World Bank Projects:
(1960 to 1990)
• The West Pakistan Water and Power Development Authority (WAPDA)
project, which was launched in the 1960s to provide irrigation and
hydroelectric power to the western region of Pakistan.
• The West Pakistan Water and Power Development Project (1960-1964), which
provided financing for the construction of dams, hydroelectric power stations
and irrigation systems.
• Pakistan Education Sector Reforms Project, which aimed to improve the
quality and accessibility of education in the country.
• The Pakistan Emergency Flood Recovery Project, which provided emergency
assistance to communities affected by the 2010 floods
World Bank Projects 2012 to 2022:
• The Sindh Education Reform Program (SERP) project, which was launched in
2013 to improve the quality of education and increase enrollment in schools in
the Sindh province.
• The Pakistan Integrated Water Resource Management (IWRM) project, which
was launched in 2016 to support the management of water resources in
Pakistan.
• Balochistan Human Capital Investment Project. This project start in 2020.
Project aims to improve access to education and healthcare services in the
Balochistan province and empowerment of women.
• Sindh Flood Emergency Rehabilitation Project approve in December 2022.
8. • In 2012, 2014, 2016 and 2020 Pakistan received total $5.7B
Loans in Energy sector.
• In 2013 received $900 million loans to improve country's
infrastructure.
• Pakistan received 2 loans from world bank to improve its
education sector.
• 2022, World Bank’s Board of Executive Directors approved
$435 million in financing for three projects.
• Recently on 10 Jan 2023, at Geneva conference. World bank
give $2 Billion to Pakistan for flood recovery.
Wo r l d B a n k l o a n s t o
P a k i s t a n :
9. International Monetary Fund (IMF) Projects:
• Pakistan joined IMF in 1950 as newly established country was facing fiscal problems since
its creation in 1947 from British India.
• In 1958, for the first time, Pakistan went to IMF for bailout. For this, IMF lent out US$ 25
million to Pakistan on standby arrangement basis on 8 December 1958.
• In 1971, Pakistan lost its Eastern half, East Pakistan, after the Bangladesh Liberation War.
• For which, Pakistan got loan of US$ 84 million in 1972, US$ 75 million in 1973 and
another of US$ 75 million in 1974 to meet its growing needs. In 1977, another standby
arrangement of US$ 80 million was made on urgent basis.
• In 1993, Benazir Bhutto again came to power, and her government again went to IMF and
reached an agreement to get stand-by arrangement of US$ 88 million on 16 September
1993.
• Sharif government went to IMF on urgent basis for the first time and reached an agreement
to get two amounts of US$ 265.37 million and US$ 113.74 million on October 20, 1997. In
2008, Yousaf Raza Gillani received a $7.6 billion loan from the IMF.
• In 2018, Imran Khan became Prime Minister of Pakistan. In 2019, when economic
conditions worsened, they went to IMF for the twenty-second time for a loan of US$1
billion. IMF gave loan based on conditions such as hike in energy tariffs, removal of
energy subsidy, increase in taxation, privatization of public entities and fiscal adjustments
to the budget.
• In 2020, Pakistan received a $1.4 billion emergency loan from the IMF under its Rapid
Financing Instrument to help the country address the economic impact of the COVID-19
pandemic.
• In August 2022, IMF Approves $1.17 Billion Bailout to Avert Near-Term Default.
10. Asian Development Bank Projects (1966 to 1980):
• The Indus Basin Project (1966-1976): ADB provided $205 million in loan assistance
for this irrigation and hydroelectric power generation project, which aimed to increase
agricultural productivity and improve energy supply in Pakistan.
• The Pakistan Power Development Project (1978-1980): ADB provided $240 million
in loan assistance for this project, which aimed to increase electricity generation
capacity in Pakistan through the construction of new power plants.
• The Pakistan Water and Power Development Authority (WAPDA) Project (1978-
1980): ADB provided a loan of $80 million for the construction of the Guddu Barrage
and its associated power station on the Indus River in Pakistan.
Project Between 1981 to 2012:
• The Sindh Irrigation Sector Improvement Project (1981-1987): This project aimed to
improve irrigation infrastructure in the Sindh province of Pakistan and increase
agricultural productivity.
• The Pakistan National Highway Network Development Project (2006-2012): This
project aimed to improve national highways in Pakistan and increase connectivity
between major cities.
• The Pakistan Second Rural Access and Mobility Project (2009-2012): The project
aimed to increase access to economic opportunities and basic services for rural
communities in Pakistan through the construction of new roads and bridges.
Project Between 2012 to 2020:
• The Pakistan Sindh Secondary Education Improvement Project (2018-2023): The
project aims to improve the quality of secondary education in the Sindh province of
Pakistan by upgrading and constructing new schools, and providing teacher training
and educational materials.
11. • Access to funding
• Technical assistance
• Stabilization
• Improved credit worthiness
• Risk management
• Promote trade
• Encourage economic growth
• Promote sustainable development
• Support social programs
• Improve governance
12. • Loss of Economy
• Imposition of Structure
• Social and Environmental Impact
• Loan
• Local Economy
• Complex Process
• System of Collateral Securities
• Restriction on the Borrower
• High Rate of Interest
• Lack of Co-ordination among Financial
Institutions
• Government Institutions
13. Impacts of Foreign Aid on
Pakistan’s Economy
• Pakistan has been in a vicious cycle of debt to
these institutions, every time it receives a loan it
faces more stringent conditions, which makes it
hard to get out of the debt trap. This ultimately
leads to less room for maneuverability in the
country's development policies and a delay in
achieving sustainable development goals.
• The economy has deteriorated from bad to worse
in 2022. The outlook for the next year suggests
that the tough phase may continue for some time,
despite the government taking some corrective
measures immediately.
14. • Since the beginning of 2022, Pakistan's currency has
declined by more than 27%, reaching its lowest level of
over 240 to the dollar. This decline is a reflection of the
nation's uncertain financial circumstances.
• The World Bank estimated that the nation would need
$348 billion between 2023-2030 in response to climate
and development challenges. The devastating floods in
2022 that displaced millions call for urgent climate action
in the coming year.
• According to the World Bank’s October 2022 Pakistan
Development Update: Inflation and the Poor, the
slower growth will reflect damages and disruptions
caused by catastrophic floods, a tight monetary stance,
high inflation, and a less conducive global environment.
Recovery will be gradual, with real GDP growth projected
to reach 3.2 percent in fiscal year 2024.
15. • Pakistan's foreign exchange reserves have
dropped to $13.5 billion in 2021, while the
country's foreign debt payments stood at $7.6
billion.
• It's worth noting that the country has been taking
steps to address this, such as implementing
economic reforms, increasing tax revenues, and
reducing its fiscal deficit. However, it's uncertain
whether these measures will be sufficient to put
Pakistan on a sustainable path of economic
growth and debt reduction.
17. In conclusion, while international financial institutions
can provide valuable resources and support for
economic growth and development in Pakistan, they can
also have a number of drawbacks. The loss of economic
sovereignty, the imposition of structural adjustment
programs, high rate of interest, and potential negative
social and environmental impacts are all potential
downsides of engaging with IFIs. It is important for
Pakistan to carefully consider these potential drawbacks
and to work with IFIs in a way that maximizes the
benefits and minimizes the negative impacts.
Conclusion:
