EXPLORING THE LINK BETWEEN IMF LOAN AND ECONOMIC VULNERABILITY IN PAKISTAN: IMPLICATION FOR POVERTY AND PRO-POOR GROWTH AGENDA

Abstract

The study aims to explore the relationship between IMF loans and economic vulnerability, which affects the pro-poor growth agenda in Pakistan. A time series Autoregressive Distributed Lag (ARDL) estimation approach is applied to analyze the data. By examining various factors in Pakistan, the study investigates the short- and long-term impacts of economic factors, government policies, and institutional factors on pro-poor growth and poverty reduction. The findings suggest that IMF loans increase poverty in Pakistan in the short and long run. Among economic factors, GDP per capita and foreign exchange reserves help reduce poverty, while the current account balance exacerbates it. Government policies play a positive role in poverty reduction, with Social Action Programs (SAP) and National Rural Support Programs (NRSP) contributing significantly to alleviating poverty. However, institutional factors fail to reduce poverty. Financial development and interest rates increase poverty in Pakistan. The study recommends that the government must prioritize the basic needs of low-income people in national development policies and focus on institutional and economic reforms