Pakistan’s finances are in disarray, and the central bank of the nation reported that its foreign reserves had fallen to $3.1 billion, which analysts said was only enough to last fewer than three weeks. The poor Pakistani common man’s back has been broken by the highest inflation rate in 48 years, and they are now having trouble affording staples like food. A severe balance of payments crisis is gripping Pakistan’s crumbling economy as it struggles to pay off its enormous levels of external debt.
Prime Minister Sheriff: IMF Bail Conditions “Beyond Imagination”, but will have to agree with it
There is a political chaos in Pakistan with restless Former PM Imran Khan plotting a comeback to occupy the gadi in Islamabad.
Shehbaz Sharrif, the embattled and besieged prime minister of Pakistan, has since said that his country is forced to accept ‘beyond imagination IMF bailout terms.
In the meanwhile an IMF delegation has landed in Pakistan for a last minute discussions which would salvage and revive vital financial aid to the impoverished country , which has been stalled for months.
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IMF reforms a bitter pill to swallow
The government in Pakistan is shivering at the prospect of implementing IMF reforms and had vehemently held out against any sort of tax rises and subsidy slashing demanded by the International financial assistance body. Shehbaz Sharrif’s Government is also nervous because it fears massive backlash and anti-incumbency ahead of elections due in October.
Mr. Sherrif said in televised comments
“I will not go into the details but will only say that our economic challenge is unimaginable. The conditions we will have to agree to with the IMF are beyond imagination. But we will have to agree with the conditions,”
Pakistani leadership is now having no choice but to kotow the structural reforms initiated the IMF to revive its tanking economy. With national bankruptcy looming large , it is finding itself without any friend who can come forward and rescue its flagging and flailing economy. Pakistan in the meantime is also ready for a painful bailout from friendly countries..
A desperate Pakistani Government loosened controls on the rupee to rein in a rampant black market in US dollars, a step that caused the currency to plunge to a record low. Artificially cheap prices have also been hiked.
Situation is dire in Pakistan as it is no longer issuing letters of credit , except for food and medicines , causing a backlog of thousands of shipping containers at Karachi Port stuffed with the stock with country can no longer afford.
Political Climate
Imran Khan is out in the streets and is putting pressure on the coalition Government for early elections. His popularity in the country remains high.
IMF multi-billion dollar loan package for which Pakistan is now desperate to have was negotiated by Imran Khan in 2019.
However, his political instincts got better of him and he reneged on promises to cut subsidies and market interventions that had cushioned the cost-of living crisis , causing IMF loan program to stall.
Pakistan in which majority of people live in rural areas who live in abject poverty, has till date gone to the IMF many a times and has brokered two dozen IMF deals but in the nick of time has backed out.
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