In a modest two-room house in Lahore, Rehana, a 45-year-old public schoolteacher, holds her electricity bill with quiet disbelief.
It is more than double what she paid six months ago. With her monthly income fixed, the surge in energy costs now faces her to choose between paying the bill or her children’s school fees. This is not an isolated story—it echoes across millions of homes in Pakistan. And at the heart of it lies a familiar name: the International Monetary Fund (IMF).
The IMF has become a recurring chapter in Pakistan’s economic story, offering loans that help the country avoid financial collapse. But these bailouts come with tight strings attached—structural reforms that reshape economic policies and, in turn, everyday lives. In theory, these reforms are meant to fix economies. In practice, they raise an uncomfortable question: when a nation is forced to shape its policies to secure foreign funding, can it still claim to be truly sovereign?
The International Monetary Fund was created in the aftermath of World War II with the goal of stabilising the global financial system. Today, it provides financial support to countries facing balance of payments crises. But unlike conventional lenders, the IMF demands more than repayment—it demands transformation. From raising taxes to cutting subsidies, devaluing currency, and privatising state-owned enterprises, the conditions are broad and deeply influential. For governments walking the tightrope of bankruptcy, these reforms are not optional. They are the price of survival.
Pakistan is no stranger to IMF programmes. In 2023, the country secured yet another bailout—a $3 billion loan aimed at stabilising its failing economy and replenishing foreign reserves. But the deal included a now-familiar package: cuts to fuel and electricity subsidies, an increase in interest rates, and a push towards privatisation. In Islamabad, these moves were described as necessary. On the streets of the provincial capitals—Karachi, Quetta, Lahore, and Peshawar—they translated into anxiety and hardship.
The impact of these reforms has been immediate and severe. Basic goods have become unaffordable for many. Electricity and gas bills now consume a disproportionate chunk of household incomes. Public sector jobs are under threat as government enterprises are prepared for privatisation. Development projects have stalled as austerity takes hold.
Meanwhile, inflation continues to erode purchasing power. For those already teetering on the edge of poverty, the reforms meant to save the economy have only deepened their struggle.
These changes do not just exist in policy papers—they shape daily family decisions. A diabetic father skips insulin doses to afford rent. A university student in Balochistan drops out after fuel prices triple and buses stop running. A schoolteacher, like Rehana, now juggles bills with increasing desperation. These are not collateral inconveniences. They are central to the story of how top-down economic solutions ripple through the lives of ordinary people.
Proponents of the IMF argue that such reforms, though painful, are essential. They say stabilisation is a bitter but necessary medicine for economies plagued by mismanagement and debt. Without structural reform, countries risk long-term collapse. In some parts of the world, the IMF programmes have yielded success stories. Ireland, for example, recovered from its debt crisis with IMF involvement. Ghana and Kenya have also seen progress, though with significant internal adjustments.
But such comparisons often overlook the complexity of context. Pakistan’s governance challenges, political instability, and narrow tax base make the implementation of IMF conditions particularly disruptive. And while the economy may stabilise on paper, the question remains: whose stability is being prioritised?
This brings us to the deeper, often overlooked dimension of the debate—the philosophical and ethical dilemma of IMF-led reform. Can a country truly call itself sovereign if it cannot determine its own economic policies? Sovereignty implies autonomy and control, but under IMF arrangements, even key decisions like energy pricing or budget allocation are negotiated externally. Governments are elected by the people, yet their economic levers are increasingly directed by technocrats in Washington, D.C.
More troubling is the moral burden placed on the shoulders of the poor. Philosophers like John Rawls have argued that justice requires the wellbeing of the least advantaged to be a primary concern in any society. But IMF programmes often do the opposite. They transfer the weight of adjustment onto those who are least equipped to bear it. Fuel hikes, regressive taxes, and cuts to public services hit the working class hardest, while wealthier elites find ways to cushion the blow.
What, then, are the alternatives? Can countries like Pakistan chart a different course?
There are few easy answers. Some suggest turning to alternative lenders like China or Gulf states, though these too come with strategic expectations. Others argue that better governance, stronger tax collection, and anti-corruption reforms could reduce the need for IMF assistance in the first place. A more radical vision calls for a people-centred development model—one that prioritises public investment in education, health, and infrastructure, rather than austerity and privatisation.
Yet, any alternative requires both political will and institutional capacity, two ingredients that are often in short supply. It also demands a new kind of conversation—one that recognises the human cost of economic decision-making and resists the illusion that numbers alone define success.
There is no denying that Pakistan, like many developing nations, faces real economic vulnerabilities. It cannot print dollars, and foreign reserves don’t replenish themselves. But survival should not come at the cost of dignity. Sovereignty should mean more than a flag and a national anthem. It should mean having the freedom to make decisions in the best interest of the people, not just in the interest of creditors.
The tension between survival and sovereignty is not abstract—it plays out every day in households like Rehana’s. When national policy is shaped by foreign agreements, and the people are left to absorb the fallout, then something essential is lost—not just economically, but morally.
The IMF may help countries avoid default, but it cannot afford to ignore the stories behind the statistics. Economic stability, if it leaves the majority struggling to survive, is a hollow victory. The challenge is not whether to reform, but how to reform in a way that uplifts, rather than undermines, the very people it claims to serve.
In the end, the question is not whether IMF-led reforms work, but for whom.
