Pakistan, the United States and the IMF: Great game or a curious case of Dutch Disease without the oil?

A history of Pakistan’s relations with the IMF (and the Bretton Woods Institutions in general) 2 cannot be told without reference to the complex and changing role played by the United States, especially since the mid-1980s when the Reagan administration stepped up responses to the Soviet Union in Afghanistan. We argue that the influx of US assistance over the past quarter of a century has distorted incentive structures in Pakistan, and weakened the desire for self-reliance. It has created a Dutch Disease-like effect,3 except that the country lacks oil, and trades on its geographical importance. As this importance fluctuates over time, it leaves the country increasingly vulnerable.