Suspending $800 million in military aid won't sink the Pakistani economy by itself. And cutting civilian aid would have only a 0.14 percent impact on Pakistan鈥檚 GDP growth, calculates Shahid Javed Burki, a former World Bank vice president.
But the real concern for Pakistan鈥檚 solvency would be loss of support from international lenders like the World Bank and International Monetary Fund (IMF).
鈥淚f the US pulls out of the relationship, the IMF and World Bank look to the US before deciding, and private investors will take a huge hit,鈥� says Moeed Yusuf, South Asia adviser at the US Institute of Peace in Washington earlier this year. 鈥淧akistan won鈥檛 fail if aid disappears. But for a country in trouble, do you really want to isolate it?鈥�
In 2008, the economy took a nosedive and the IMF kept it afloat with loans. Pakistan鈥檚 former representative to the IMF Board, Ehtisham Ahmad, said recently that the IMF was going to deny the bailout request until a last-minute intervention by the White House. (The IMF in Pakistan declined to comment.) 鈥淎s long as the multilateral aid continues, it won鈥檛 impact Pakistan鈥檚 economy,鈥� says Sartaj Aziz, a former finance minister.
