Investigating The Political Economy of IMF Bailouts and Their Impact on Public Trust in Democratic Institutions in Pakistan

Abstract

This paper explored the politics of International Monetary Fund (IMF) bailouts and its effects on the democratic institution’s trustworthiness in Pakistan. The researchers used a mixed-methods research design, which involved the quantitative survey data of 400 respondents in four major cities of Pakistan and the qualitative insights of the study were based on the in-depth interviews conducted with 15 key informants. The analysis discussed the timeframe between 1988 and 2023, which included several IMF program cycles. Regression modelling showed that the awareness of IMF bailout, economic hardship perception, and government accountability were important predictors of public trust, with 58.1% of the variance. Qualitative results revealed common themes of institutional de-legitimization, elite capture, austerity fatigue, and democratic rollback. The findings showed that frequent use of IMF schemes significantly undermined the trust of people in Parliament, the judiciary, and elected governments, especially where the conditionalities involved austerity in the form of fiscal measures without apparent changes in governance. The paper concluded that the transparency of structural reforms and institutional accountability were critical pre-requisites in restoring the trust of the people in the face of IMF-induced economic adjustment in Pakistan.