The present thesis analyses the impact of foreign aid on the economy and development of Pakistan with special reference to the role of IMF and World Bank, specifically, it seeks to captures the effects of Structural Adjustment Programs in late 1980s and 1990s.

It also deals with the various development models and critically examines the failures and successes of structural adjustment programs, keeping in view the actual effects of these programs around the world.

A brief mention has been made about the structure and objectives of IMF and World Bank according to their mission statements. It helped in later analysis of their role vis-à-vis the economic situation of Pakistan and other recipient countries.

This study concludes that structural adjustment program has played significant role in Pakistan’s economic development. In this context the economic indicators like GDP, Balance of Payment, inflation and poverty reduction have shown downward trends. As the figure in the late 1980s and early 1990s show, one can conclude that it was the lean period from economic point of view. Since economy and politics are closely inter-related, the political development effecting the foreign relation with the donor countries have also been analysed. While emphasizing my own point I have to be objective; but I feel Pakistan’s economic development could have been better if alternative policies discussed in detail in the thesis had been pursued.