Austerity, Subsidy Reforms, and Welfare Contraction - Following the IMF's Structural Adjustment Programs (SAPs) in Pakistan

Muhammad Fahad Azam

Diplomová práce

Abstract:

Abstract This dissertation examines how the austerity measures, subsidy reform and welfare restructuring put in place by the International Monetary Fund’s (IMF) Structural Adjustment Programs (SAPs) during the period 1988–2025, have influenced the implementation of social policies in Pakistan. The country is one of the most frequently reformed economies among developing nations, making it an excellent case study for how global macroeconomic policy changes affect social welfare delivery within sovereign nations. Using a mixed-methods, explanatory single case study design founded in critical realism, this research examines three policy-related dimensions: (1) the development and nature of austerity and subsidy reform conditionality within IMF programs; (2) the effects of these reforms on government expenditures in critical social sectors such as health and education; and (3) the impact of the above on social protection and welfare outcomes, and realignment of poverty alleviating measures - focusing on the Benazir Income Support Programme (BISP). Methodologically, qualitative analysis of IMF program documents (Letters of Intent and Memoranda of Economic and Financial Policies) and quantitative time-series data on public sector spending are combined with the development of an Adjustment Intensity Index (AII) that allows for a systematic assessment of the various levels of stringency associated with conditionality across program cycles. The evidence of adjustment conditionalities to date illustrate significant accelerating trends over multiple periods, with the 2023-27 cycle being the highest level recorded. The increased intensity can be attributed to continued social sector budget reductions, with the result being that health and education expenditures are now lower or flat when measured in terms of gross domestic product (GDP). The anti-poverty strategy in place has been transformed structurally from generalized subsidy programs to targeted cash transfer programs (primarily through BISP), resulting in expanded program coverage and improved targeting efficiency; however, the real value/adequacy of these transfers has not been sufficient for offsetting both welfare and inflationary effects associated with the elimination of the subsidy program and increases in living costs. The main argument presented in this thesis is that, despite restructuring social policies as a result of IMF-led adjustment in Pakistan, the result is evident in the regressive form of welfare. The reconfiguration of social policies from universally available and price-based support mechanisms to more targeted form of fiscal safety net has led to sustained decline of welfare indicators with no improvement or equity expressed through macroeconomic stabilization gains and first stage inclusive development. The dissertation builds on the existing scholarship by presenting a longitudinal, policy integrated analysis of the relationship between IMF conditionalities and welfare outcomes. In addition, it provides several recommendations for improving the success of future programmes by increasing social expenditure commitments, improving transfer adequacy, and incorporating human development safeguards into the structure of IMF program design.

Keywords

Structural Adjustment Programs (SAPs), International Monetary Fund (IMF), Fiscal Austerity, Subsidy Reforms, Social Policy, Pakistan, Poverty and Inequality, Benazir Income Support Programme (BISP)

Jazyk práce: angličtina

Datum vytvoření / odevzdání či podání práce: 29. 4. 2026

Obhajoba závěrečné práce

• Obhajoba proběhla 15. 6. 2026
• Vedoucí: prof. PhDr. Tomáš Sirovátka, CSc.
• Oponent: Mgr. Miroslav Suchanec, Ph.D.

Masarykova univerzita

Fakulta sociálních studií

Magisterský studijní program / obor:
Public and Social Policy and Human Resources / Social Policy and Employment Policy