Impact Of IMF Loans On Fiscal Policy Structure: Empirical Evidence From Pakistan
Author: Atiqa Khan

Like other developing countries, Pakistan is also facing financial constraints due to its huge trade and fiscal deficit. Hence, in order to fill these gaps and proceeds its growth and development process, Pakistan is taking loans from external sources including International Monetary Fund (IMF). In this association the key objective of this study is to empirically examine the impact of IMF loans on fiscal policy structures of Pakistan. To meet the objective of the study, three different empirical models have been estimated with three different fiscal policy tools. Revenues, Total Expenditures and Budget Deficit are the dependent variables. The variable of interest is IMF loans which have been treated as dummy variable. The empirical models are estimated through Autoregressive Distributed Lag (ARDL) for the time period 1988-2016. The findings of this study reveal that IMF loans increase the tax revenues. On the other hand, loans from IMF decrease expenditures. So as a whole IMF loans are having no impact on budget deficit as the change in budget deficit has been cancel out as one part is increasing and other is showing a decrease. Policy implications are effective utilization of the loan and devising policies that will help the economy to come out from the vicious circle of loans. Specifying particular amount of loans for revenues generation, expenditures and to bring down budget deficit. Supervisor:- Dr. Miraj-ul-Haq

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Keywords : Fiscal Policy, IMF Loans
Supervisor: Miraj ul Haq

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