- The loan has been traded at least three times in the last two years.
- Some believe that Pakistan’s tilt towards Iran and China has angered the US.
- “The policies supported by the EFF are not relevant to Pakistan’s foreign affairs,” the IMF says.
The deepening mistrust between Pakistan and the International Monetary Fund (IMF) can be partly attributed to political and geopolitical developments, a situation that can be likened to a ticking time bomb. Sakti, which is waiting to be finished. The uncertainty is far from over. Here’s why.
Officials on both sides of the negotiating table have been hurling accusations at each other for months, blaming each other for delays in implementing needed reforms with Pakistan and a lack of leniency from the IMF. is going.
This hardening of the multilateral lender’s stance has given rise to many conspiracy theories.
The current bailout program was launched in 2019 by the former Pakistan Tehreek-e-Insaf-led government.
The loan program has collapsed at least three times in the past two years, with each new finance minister wanting to renegotiate.
The current Finance Minister Ishaq Dar was appointed in September. He had expected an IMF team to arrive in October to resume talks, but they did not arrive until late January, a long delay that Dar described as “extraordinary”.
While Pakistani officials are using every possible tactic to bring the lender closer to the last resort, IMF officials are taking their sweet time as the trust deficit prevents them from meeting Islamabad’s preconditions. has forced a re-examination of all claims made regarding loan program.
With all sectors of the economy under strain due to continued devaluation of the Pakistani rupee, record high inflation, and continued political turmoil, Prime Minister Shehbaz Sharif’s government has decided to complete the ninth review and terminate the existing agreement. Talking to. .
The government plans to renegotiate a new program with the fund shortly after announcing the federal budget for fiscal year 2023-24 – expected to be unveiled on June 9 (Friday).
But it is hard to see any more necessary ballot tightening ahead of the general election later this year.
Economists and analysts are increasingly skeptical about whether an IMF deal is going to happen given the political and economic challenges.
While some believe. Pakistan leaning towards Iran and China The IMF has categorically rejected the claim, which has angered the US, thereby affecting the program’s recovery timeline.
IMF Resident Representative Esther Perez Ruiz said that the policies supported by the EFF have nothing to do with Pakistan’s foreign affairs. Geo.tv.
Earlier, former Finance Minister Dr. Hafeez Pasha also expressed his reservations regarding relations with Iran.
“Now it is a new relationship. The signing of the agreement on normalization of relations between Saudi Arabia and Iran has changed the situation in this regard. Thus, the situation in the Middle East has improved and Pakistan now has Some past commitments have to be honored – such as the letters that Iran has kept and are still pending. So, the US is likely to be a notable member. [of the IMF] It may be objected to,” he said, “yet, they do not feel it has affected the Ninth Review”.
Bloomberg Quoting S&P Global Ratings, it said: “Pakistan’s gross external financing needs as a ratio of current account receivables to disposable reserves is projected to increase to 139.5 percent in fiscal 2024 from 133 percent in 2023.”
“We see the IMF program as the basis for significant monetary policy reforms,” said Andrew Wood, an independent analyst at S&P in Singapore. Bloomberg.
“Agreement on the current review cycle may also give Pakistan further credibility with other bilateral and multilateral lenders.”
Last week, Defense Minister Khawaja Asif strongly criticized the recent statement of IMF Pakistan chief Nathan Porter, which is being termed as interference in the internal affairs of the country.
The IMF generally refrains from commenting on domestic political issues. However, in a statement, Porter expressed the IMF’s hope for a peaceful resolution in accordance with Pakistan’s constitution and the rule of law.
Minister of State for Finance and Revenue, Dr. Ayesha Ghos Pasha, gave an immediate response to Porter’s statement, stressing that the head of the IMF Pakistan should refrain from interfering in the country’s political affairs.
on Tuesday, in response to an email BloombergThe finance ministry said it was optimistic about finalizing the agreement with the IMF ahead of the budget on June 9.
Pakistan has raised $4 billion in external financing and aims to secure the remaining $2 billion to meet the $6 billion target needed to revive the stalled bailout, the ministry said.
Despite a significant reduction in the current account deficit, Islamabad is committed to completing the IMF program and has already demonstrated its commitment.
The ministry also emphasized Pakistan’s determination to mobilize additional liquidity despite difficult circumstances.