What I am referring to is the scale of investments India and Pakistan need to address their infrastructure, healthcare, education, and basic needs of the people. To me, it's a bailout of the vast population of South Asia's poor, hungry and illiterate people who are suffering because of lack of investment.
There is no real economic definition of bailout. The term originated in the flying parlance referring to a pilot bailing out of a crashing air plane to save his or her life.
IMF usually gets involved as a lender of last resort to help prevent sovereign defaults. What happened in Pakistan was a liquidity crisis that can happen anywhere when there are significant exogenous shocks such as dramatic rise in oil and food prices.
Pakistan's problem was compounded by the change in government coinciding with the oil price shock to which the new government did not react fast enough. It failed to follow through on a planned privatization of several public enterprises to raise billions of dollars in a timely manner before the global financial meltdown hit in 2008.
Read here to understand it:
Haq's Musings: Pakistan's Economic Performance 2008-2010
Some of the strongest and smartest financial institutions such as Goldman Sachs, the creator of BRIC and N11 concept, also needed to be bailed out in the US because of that crisis.
Strong Asian Tiger economies faced the same issues in 1997, a crisis which was precipitated by currency traders. IMF had to come to their rescue.
The G7 nation of UK needed it in 1976, and may need it yet again. Greece is in trouble right now seeking a much bigger bailout in terms of percent of its GDP than Pakistan needed.
In reality, no country is immune from these types of crises, with the possible exception of US which controls the world's biggest reserve and trade currency. So there is no need to be smug about it. That's the reason why IMF was set up and it continues to exist.
Confidence is a fragile thing, and economies run on confidence. It can change for the slightest of reasons.
