IMF offers Pakistan a breathing space, but political instability may spoil possibilities: report
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Islamabad: Pakistan has won a vital economic booster from International Monetary Fund, which will offer a breathing space to the cash-strapped nation, Bloomberg reported.
After months of discussions, Pakistan has finally clinched a draft agreement with the international body for $3 billion loan programme.
However, the political instability looming on the nation could jeopardize its hopes of reviving the failing economy, reports say.
Pakistan saw volatile situation a couple of months ago, the worst since the former PM Imran Khan was ousted in April 2022.
Khan is slapped with more than 100 cases ranging from corruption to murder, according to Bloomberg.
‘Everything hinges on whether political stability returns,’ Uzair Aqeel, a partner at London-based Nairang Capital, was quoted as saying.
In last August, a bailout programme of $1.1 billion by IMF was halted after Pakistan failed to meet some conditions.
However, a fresh deal was later managed after PM Shehbaz Sharif ‘s efforts involving phone calls and meetings with IMF managing Director Kristalina Georgieva paid off, according to the report.
Uzair Aqeel added that the government showcased that reforms could be done, which however depends on whether the government will continue work systematically.
Pakistan is facing a huge external debt obligation to the tune of $23 billion due in the fiscal year starting July.
The debt it faces is more than the six times the nation’s foreign-exchange reserves, and the IMF assistance at this point a means a lot to Pakistan.
The worst economic crisis since the formation of the nation has made it harder for Pakistanis to buy fuel and food.
The government is looking forward to shrink fiscal deficit through tax hikes which could put the administration’s electoral prospects later in October in trouble.
According to Ruchir Desai, a co-fund manager at the AFC Asia Frontier Fund, Pakistan is not in a position to make serious reforms and added that nation will need a long-term agreement with the IMF.