Thu. Jun 1st, 2023

The negotiations to get a new financial package from the IMF were crucial for Pakistan, which is burdened with political chaos, deteriorating security situation, balance of payments crisis and external debt burden.

An agreement could not be reached between Pakistan and the IMF
An agreement could not be reached between Pakistan and the IMF


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The International Monetary Fund (IMF) said on Friday that it had completed its visit to Pakistan but was unable to reach an agreement with the financially troubled country. Pakistan agreed to a $6.5 billion loan package with the international lender in 2019 and has been struggling to meet IMF conditions to get it.

IMF Mission Chief Nathan Porter said in a statement issued on Friday that policy measures with committed financial support from government partners are necessary for Pakistan to successfully restore economic stability and advance sustainable development. Timely and decisive implementation is essential.

Pakistan’s Finance Secretary Hamid Yaqoob told the media that the IMF mission has asked for more time for the agreement at the staff level and the agreement will be concluded after approval from Washington.

What did the IMF say?

The statement issued at the end of the visit of the IMF mission to Pakistan welcomed the commitment of Prime Minister Shehbaz Sharif to implement the policies, saying that these steps are necessary to ‘protect macroeconomic stability’.

According to the declaration, its key priorities for Pakistan include strengthening the fiscal position with sustainable revenue measures and reducing untargeted subsidies. And although there has been a lot of progress in policy initiatives, no agreement has been reached yet. The IMF thanked the Pakistani authorities for the constructive dialogue.

“Virtual talks will continue in the coming days to finalize the details of the implementation of these policies,” the statement added, adding that efforts to pay down huge external debt amid political chaos and a deteriorating security situation. Pakistan’s economy is facing severe difficulties and balance of payments crisis.

A delegation of the International Monetary Fund (IMF) arrived in Islamabad last week for tough talks with Pakistan. Pakistani Prime Minister Shehbaz Sharif had said that the IMF had set such stringent conditions that were “beyond imagination”.

While analysts have warned that turning a blind eye to the situation and pushing Pakistan to the brink would have serious political consequences for the ruling parties, on the other hand, agreeing to the IMF’s conditions could increase the prices of daily necessities. will

Pakistan’s central bank released fresh data on Thursday warning that its foreign exchange reserves had fallen by $170 million in a week, from just $2.9 billion as of last Friday.

What does the IMF want?

The IMF wants the nuclear-powered country to expand its ultra-low tax base, end tax breaks for the export sector and increase subsidized petrol, electricity and gas prices to help low-income families. Do it.

The IMF is also pressuring Pakistan to keep US dollars in the bank as a guarantee for further assistance from the World Bank, including friendly countries such as Saudi Arabia, China and the United Arab Emirates.

Pakistan, the world’s fifth-largest populous country, is no longer issuing letters of credit for any commodity except essential food and medicine. Distressed industries are struggling to get the government to open up imports. Apart from this, thousands of shipping containers are also stranded at the port of Karachi. Domestic industries have warned that the closure of cargo will lead to rapid closure of factories, which will have an impact on employment.

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