Impact of Foreign Aid and IMF Programme on Economic Growth in Pakistan

Authors

Naeem Akram(1) Naeem Akram Affiliation Assistant Chief, Ministry of Planning Development and Special Initiatives, Islamabad, Pakistan Other articles by this author , Talat Anwar(2) Talat Anwar Corresponding author Affiliation Professor of Economics, I A Hanfi SBP Memorial Chair, School of Economics, Bahauddin Zakariya University, Multan, Pakistan Email addresstalat.anwar2016@gmail.com Other articles by this author

  1. Assistant Chief, Ministry of Planning Development and Special Initiatives, Islamabad, Pakistan
  2. Professor of Economics, I A Hanfi SBP Memorial Chair, School of Economics, Bahauddin Zakariya University, Multan, Pakistan

https://doi.org/10.36923/jcmi.v5i2.589

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Abstract

Foreign aid has been recognized as an important source of external financing in developing countries. Considering the significance of foreign aid in Pakistan, present study has attempted to empirically analyse the impact of foreign aid and IMF programme on economic growth in Pakistan. The Autoregressive Distributed Lags (ARDL) technique has been employed to estimate the model using . time series data from 1975 to 2020. The study finds that foreign aid exhibits a negative impact on economic growth both in the short run as well in the long run. The study further reveals that loans have a negative, while the grants portray significantly positive impact on economic growth. Similarly, in long run role of IMF is positive for economic growth of the country, however, in the short run, its impact is negative. The major policy implications for the government of Pakistan is to avoid foreign economic assistance and rely on, internal resource generation by increasing its revenue. Foreign aid requires an efficient external debt management and its payment obligations at the lowest possible cost consistent with a prudent degree of risk.

Article information

Keywords
ARDLforeign aidPakistaneconomic growth
Section
Articles
Issue
Vol. 5 No. 2 (2024)
Submitted
August 28, 2024
Accepted
December 20, 2024
Published
December 20, 2024
Corresponding author
Talat Anwar
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