Pakistan’s efforts to secure a $7 billion loan program from the International Monetary Fund (IMF) have hit a snag, with the global lender yet to approve the deal despite a staff-level agreement in July. The delay has sparked concerns about Pakistan’s ability to meet its debt obligations and avoid default.
The IMF’s executive board, responsible for ratifying the agreement, has not included Pakistan’s case on its agenda, fueling speculation about whether the country has failed to meet the lender’s conditions. Pakistan’s Deputy Prime Minister Ishaq Dar has accused the IMF of “deliberately delaying” the release of funds, citing “geopolitical factors” at play.
Pakistan’s economic struggles are well-documented, with the country facing a severe economic crisis, political instability, and a massive debt burden. The IMF loan program is seen as a lifeline for the government and the economy, but the delay has raised concerns about the country’s ability to meet its debt obligations.
Experts believe that Pakistan’s failure to meet two key IMF demands – securing the rollover of debt repayments to China, the UAE, and Saudi Arabia, and obtaining an additional $2 billion in financing – is the root cause of the delay. The uncertainty surrounding the IMF approval has rattled the stock markets, with minor slumps reflecting concerns about the program’s future.
The situation has been further complicated by the ongoing tussle between the government and the opposition Pakistan Tehreek-e-Insaaf party, which claims that its mandate was stolen in the February elections. The political instability has affected the government’s credibility and raised concerns about its ability to implement the IMF’s conditions.
As Pakistan struggles to secure the IMF loan, experts warn that failure to do so could be disastrous for the economy. The country’s external debt stands at over $130 billion, with nearly 30 percent owed to China. Pakistan is due to repay almost $90 billion over the next three years, with the next major payment due by December.
The delay in the IMF approval has raised questions about the lender’s motives and whether geopolitical factors are at play. Pakistan’s perception is that the IMF has started imposing strict conditions on its loan programs since the country grew closer to China, its principal financial and strategic partner.
As the situation continues to unfold, one thing is clear – Pakistan’s economic future hangs in the balance, and the IMF loan program is crucial to its survival. Will Pakistan be able to secure the loan and avoid default, or will the delay prove disastrous for the economy? Only time will tell.
