Ajit Karn
Pakistan’s Prime Minister Shehbaz Sharif said Friday in Peshawar that the government would have to agree to “unimaginable” terms for an IMF bailout in order to get help. Tuesday, a group from the International Monetary Fund (IMF) arrived in Pakistan for last-ditch talks to get vital financial aid that has been stuck for months back on track.The IMF wanted the government to raise taxes and cut subsidies, but the government didn’t do it because it was afraid of what would happen before elections in October.
“I won’t go into details, but I will say that our economic problems are impossible to imagine. We can’t even imagine the terms we’ll have to agree to with the IMF. But we’ll have to agree to the terms, “In comments shown on TV, Mr. Sharif said.
Pakistan’s economy is in bad shape. It has a balance of payments crisis and is trying to pay off a lot of foreign debt while the country’s government is in chaos and security is getting worse.
Thursday, the country’s central bank said that its foreign exchange reserves had dropped again to $3.1 billion, which analysts said was not enough to cover imports for more than three weeks.
On Wednesday, inflation from one year to the next hit a 48-year high, making it hard for Pakistanis to buy even the most basic foods.
Before the IMF visit, Islamabad started to give in to pressure. The country was close to going bankrupt, and no friendly countries were willing to help out in a less painful way.
To stop the US dollar black market from getting out of hand, the government loosened control over the rupee. This caused the rupee to drop to a record low. Gas prices that were too low have also gone up.
Pakistan, which has the fifth-largest population in the world, has stopped issuing letters of credit, except for essential food and medicine. This has led to a backlog of thousands of shipping containers full of goods that the country can no longer afford at Karachi port.
Political chaos
The country’s economy is falling apart, and so is its government. Former Prime Minister Imran Khan is putting a lot of pressure on the government to hold early elections while his popularity is still high.
Mr. Khan, who lost his job last year because of a vote of no confidence, was able to get a loan package worth billions of dollars from the IMF in 2019.
IMF Bailout Conditions "Beyond Imagination", Will Have To Agree: Pak PM Shehbaz
Beggers cant be choosers 🤣🤣
If Pakistan doesnt get funds, it is doomed.
— Ninja0179048354 (@Ninja0179048354) February 3, 2023
But he broke his promise to cut subsidies and market interventions that had helped ease the cost-of-living crisis. This stopped the programme from moving forward.
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In Pakistan, where most people live in poverty in the countryside, this is a common pattern. Over the past few decades, more than two dozen IMF deals have been made and then broken.
