IMF delays loan deal to Pakistan, embarrassing Sharif govt

Even countries with which Pakistan has friendly relations are no more willing to financially assist Islamabad, which has “got into the habit of seeking help.” writes Mahua Venkatesh

The delay in International Monetary Fund’s (IMF) concretisation of the bailout package for Pakistan has caused much embarrassment for the Shehbaz Sharif government especially as it has been steadily raising energy prices along with taxes to fulfil most of the demands made by the multilateral agency.

The Express Tribune added that despite these unpopular measures, the IMF has not yet been convinced and handed another list of demands to Pakistan before the programme is revived.

The IMF, among its many demands, asked Pakistan to renegotiate the deals under the China Pakistan Economic Corridor (CPEC). According to reports, the multilateral lender has also asked Pakistan not to borrow more from China.

Now indications are that it may take some more time to concretise. Even countries with which Pakistan has friendly relations are no more willing to financially assist Islamabad, which has “got into the habit of seeking help.”

The delay and prolonged negotiations have also impacted the inflow of bilateral assistance at a time when Islamabad urgently needs foreign currencies to keep itself afloat. Though the Sharif government was expecting the much-awaited IMF package by June end, indications are that it may take some more time.

“We have now come to a stage where our friends as well as international lenders are no more listening to our same old stories. They realise we just want to live on dole-outs,” the newspaper said in its report.

Pakistan’s debt to GDP is about 85 per cent. The country needs a staggering $23 billion in order to meet its foreign debt servicing requirements in 2022-23. Though the country received $2.3 billion from China, it is not enough to support the economy.

“Essentially no lender will give you money to clear off your earlier debt. And that is the reason why Pakistan’s economic situation has kept deteriorating — it has not focused on bringing any structural reforms to strengthen the economy,” an analyst with a ratings agency told India Narrative.

While inflation is now galloping, the IMF’s list of pre-requisites is getting longer. In June the inflation rate based on the Consumer Price Index (CPI) rose to 21.3 per cent in June up from 13.8 per cent.

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