Pakistan under IMF grip; conditions 'beyond imagination'

By Al Mayadeen English
Source: Agencies
3 Feb 2023 12:49

The Prime Minister announces that Pakistan will have to agree to the IMF terms as the economy is near collapse.

Pakistan's Prime Minister Shehbaz Sharif

Pakistan will have to agree to the terms of the International Monetary Fund (IMF) for a new loan, said Prime Minister Shehbaz Sharif on Friday, describing the terms and conditions as "beyond imagination".

Earlier this week, an IMF delegation visited the Asian country for the last attempt to set forward the financial agreement, which has been stalled for months.

The Pakistani government earlier opposed abiding by the IMF's strict requirements on raising taxes and slashing subsidies.

"I will not go into the details but will only say that our economic challenge is unimaginable. The conditions we will have to agree to with the IMF are beyond imagination. But we will have to agree with the conditions," Sharif stated in televised comments.

Pakistan, which is on the verge of economic collapse, has been facing a political crisis and is struggling with deteriorating social issues and security.

The country's balance of payments crisis is one of the largest problems striking Pakistan that is causing major instability in the local currency's rate.

Pakistan's foreign exchange reserves have fallen to $3.1 billion, as the country now stands at $100 billion in foreign debts and liabilities, and the country is scheduled to repay over $26 billion this fiscal year in foreign debts and bridge the country's massive current account deficit due to trade imbalance.

According to the central bank, the current foreign exchange reserves are not enough to even for three weeks of imports, while Pakistanis are unable to afford basic foods due to the forty-eight-year high inflation year-on-year.

Despite earlier talks with friendly countries on financial bailouts, Pakistan was forced to give in to the IMF terms as the country faced a very critical economic and financial state and is unable to wait for the results of the talks.

Except for basic essential medicines and food, the Asian country has halted giving letters of credit (LOCs), which resulted in a backlog of tens of cargo ships that the country can no longer pay for.

Pakistan has entered previously a dangerous phase following the ousting and assassination attempt on the highly popular former Prime Minister Imran Khan and his accusation that it was a plan involving Sharif and other governmental figures.

In 2019, Khan negotiated a loan package from the IMF, however, he failed to meet the demands on cutting subsidies and market direct intervention, which caused the issue to be stalled.