Last Update: February 04, 2023, 14:27 IST
The IMF bailout package began in 2019, but after the previous Imran Khan government backed out of commitments, the program was stalled.
Problems will escalate for ordinary Pakistanis, who are already reeling under inflationary pressures coupled with acute shortages of essential commodities
With foreign exchange reserves falling to $3.08 billion, Pakistan has no option but to accept International Monetary Fund’s (IMF) stringent norms for reinstatement of the loan package under the Extended Fund Facility (EEF). Pakistan’s Prime Minister Shehbaz Sharif’s worries will increase as the general elections approach. IMF riders will further increase inflation and dent the common man’s pocket.
Problems will increase for ordinary Pakistanis, who are already grappling with inflationary pressures coupled with acute shortages of essential commodities.
an analyst told India The narrative facing unique economic stress, Islamabad may seek to increase the size of the loan programme. However, he added that the loan program cannot bring the economy back in order.
The Pakistan Institute of Development Economics (PIDE) earlier said that while the South Asian nation has already taken 22 debt packages in the last 70 years, “no permanent solution has been found yet.”
Unless structural reform measures are taken, Pakistan’s economy will continue to suffer from such “diseases” from time to time.
Meanwhile, the IMF team, which rejected the Sharif government’s plan to manage circular debt, has asked cash-strapped Pakistan to eliminate unbudgeted power subsidies worth Rs 675 billion (Pakistanis). It has set hike in power tariffs along with implementing revenue generating measures amid limited fiscal room.
Sharif described the bailout riders set by the multilateral agency as “unimaginable”.
“I will not go into details but will only say that our economic challenge is unimaginable. The terms we will have to agree to with the IMF are beyond imagination. But we have to agree to the conditions,” Sharif said in a televised address.
The IMF bailout package began in 2019, but after the previous Imran Khan government backed out of commitments, the program was stalled. Sharif’s first finance minister, Miftah Ismail, was instrumental in reviving the IMF loan before Ishaq Dar took over. Ismail has started eliminating fuel subsidies by raising prices. However, he was unceremoniously fired. Dar, on the other hand, reversed Ismail’s policies by cutting fuel prices, causing the IMF to halt the loan program once again.
Last year’s devastating floods have added to the difficulties. A UNICEF report said that as of last month, 4 million children were living near contaminated and stagnant floodwaters, threatening their survival and well-being. It states, “The emaciated, hungry, children are fighting a losing battle against severe acute malnutrition, diarrhoea, malaria, dengue fever, typhoid, acute respiratory infections and painful skin conditions.” Systems and schools have been destroyed or damaged.
“Considering the situation Pakistan is passing through, any further increase in inflation will come as a shock to the people of the country,” the analyst said.
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(This story has not been edited by News18 staff and is published from a syndicated news agency feed)