Last Update: January 25, 2023, 11:26 AM IST
If Pakistan and the IMF reach a consensus, Islamabad would immediately receive at least $1.2 billion and release funds from Saudi Arabia, the United Arab Emirates and China as well as institutional lenders. (Reuters)
The faltering economy also spells trouble for the political class as mini budgets and further taxation may anger the public
In another blow to Pakistan, the International Monetary Fund (IMF) has also refused to visit the cash-strapped country and instead put forth new conditions to help further.
As part of its recommendations, the IMF has asked Pakistan to impose new taxes and pass a mini budget for 200 million – steps that could increase the rate of inflation and put more burden on the common man. Inflation in Pakistan is currently at the 25 percent mark and any move to increase the rate could spell political disaster in the country.
The international body has said that it will visit Pakistan for the ninth review as soon as the conditions are met. The next installment of the loan also depends on the terms.
The faltering economy also spells trouble for the political class as mini budgets and further taxation may anger the public. This also means bad news for Imran Khan-led Pakistan Tehreek-e-Insaf (PTI) as the net government will have to deal with the influence of the IMF.
If Pakistan and the IMF reach a consensus, Islamabad would immediately receive at least $1.2 billion and release funds from Saudi Arabia, the United Arab Emirates and China as well as institutional lenders. However, if Pakistan fails to honor the conditions, the IMF will not approve the bailout package and friendly countries will withdraw any assistance.
Pakistan’s economy has been in shambles for a long time and with political uncertainty it would not be wrong to say that the country is facing a long and uphill battle to recover.
According to a Geo News report, Pakistan’s foreign exchange hit a record low of $4.56 billion, which can only cover three weeks’ worth of imports. According to the Pakistan Revenue, there has been a sharp increase in the Sensitive Price Indicator (SPI) of prices of essential commodities by 32% year-on-year (YoY) for the week ending January 19, 2023. Pakistan’s current account deficit declined by 60 percent to $3.66 billion in the first half (July-December) of fiscal year 2022-2023, mainly due to the import bill.
Italy-based LNG trading company ENI said the country could also face a worsening fuel crisis, as it would not be able to deliver its next cargo.
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