Pakistan engages in talks with IMF over economic crunch
May 18, 2022
Islamabad [Pakistan], May 18 : Battling an acute economic crunch, the Pakistan government has begun engaging in talks with the International Monetary Fund (IMF) in the Qatari capital Doha on Wednesday over the release of crucial funds. The talks are expected to continue even in the next week.
Although Pakistan has sought international support for its economy, the process has slowed down owing to the slow pace of the economic reforms in the country, reported Dawn newspaper. Pakistan has hit an all-time low with its crippling national debt, surging inflation, and a plunging rupee.
According to a Pakistan economist Shahrukh Wani, "the government will try to convince the IMF that for political stability purposes it is important to keep at least some of the subsidies." He further added that "The IMF will possibly, rightly, say that these are unsustainable and they should be rolled back to make the trade and budget deficit manageable."
The Pakistan Ministry of Finance tweeted, "talks with the IMF Mission started today. Finance Minister Miftah Ismail, MoS Aisha Ghous Pasha, Finance Secretary Hamed Yaqoob Shaikh, Acting Governor SBP Murtaza Syed, Chairman FBR Asim Ahmad and senior officers from Finance Div joined virtually."
Earlier, former Pakistan Prime Minister Imran Khan had signed a USD 6 billion IMF bailout package from which Islamabad has received USD 3 billion. However, as the programme would be ending in the latter part of the year, Pakistani officials are seeking to extend its period till the next year in June as well as release the next tranche of USD 1 billion, reported Dawn newspaper.
Further, in recent meetings with the new Pakistan Finance Minister, the IMF had agreed on the continuation of the loan programme with the reversal of fuel subsidies, introduced by the ousted Prime Minister, Imran Khan government. However, the summaries by the Oil and Gas Regulatory Authority accompanied by the Pakistan finance ministry to raise the fuel prices have been rejected by the newly-elected Pakistan Prime Minister, Shehbaz Sharif several times.
"It's an administration that has refused to take hard political steps to bring eventual economic relief -- but that's exactly the sacrifice it must make by going to the IMF," said the deputy South Asia director at the Wilson Centre in Washington, Michael Kugelman, as reported by Dawn newspaper.
Meanwhile, the fast depletion of the foreign exchange reserves was the result of Pakistan's inflation of twin deficits, a lack of foreign currency inflows, and a sharp increase in the foreign debt servicing obligations. Inflation in Pakistan entered the double-digit mark in July, the biggest surge in nearly six years.
