IMPACT OF IMF’S EXTENDED FUND FACILITY (EFF) ON MACROECONOMICS OF PAKISTAN

Abstract

The International Monetary Fund's (IMF) Extended Fund Facility (EFF) utilized by several countries including Pakistan who facing the economic challenges. This study tried to analyze the impact of the IMF's EFF program on the macroeconomics of Pakistan. The study examining the different scopes of EFF program, including its objectives, conditions, and way forward. The paper also assess its effects on the main macroeconomic indicators such as economic growth, inflation, fiscal discipline, and external sector stability. The EFF program, implemented in Pakistan during a period of economic distress, aimed to address the country's balance of payment crisis, stabilize the exchange rate, restore investor confidence, and promote sustainable economic growth. Under this program, Pakistan committed to a set of economic reforms and structural adjustments, including fiscal consolidation measures, monetary tightening, and structural reforms in key sectors such as energy and taxation. However, the implementation of the EFF program also had some adverse effects on the macroeconomics of Pakistan. The program's stringent conditions, such as fiscal austerity measures and energy tariff adjustments, contributed to a temporary slowdown in economic growth. Furthermore, the austerity measures had distributional consequences, impacting vulnerable segments of society and potentially widening income inequality.