From interest rate hike, to jacking up gas and electricity prices, Pakistan has done almost everything including slapping levy on petroleum, but the International Monetary Fund is not trusting Pakistan.
The IMF distrust was also highlighted by Minister of State for finance Ayesha Ghaus Pasha while briefing the senate standing committee for finance. IMF has lost trust in Pakistan and to restore the lost trust we are trying to implement every condition of IMF on a priority basis, she added.
Ms. Pasha seemed quite an optimist regarding getting financial aid from friendly countries and said that soon progress will be made in this regard while apprising the senate standing committee for finance
The IMF tranche has been on the negotiating table since February, with progress contingent on strict measures required by the programme. Despite the government’s insistence that a deal will be unlocked soon, there have been delays, and the burden of high inflation and interest rates, import barriers, and low foreign exchange reserves has been tough.
The international lender is now seeking assurance of external financing for Pakistan from friendly countries including China, Saudi Arabia and the United Arab Emirates. China has rolled over $2 billion loan for Pakistan, according to the sources, while Pakistan is trying hard to get financial support from the KSA and teh UAE.
Pakistan has been struggling not only with unlocking this deal but also in persuading other state funds. Convincing Saudi Arabia and other Gulf countries has been difficult, and delays in decision-making by the government have made matters worse.
To move forward, we need to give assurances, and it seems that relief is far-fetched. Against this backdrop, the decision by Islamabad to give a petrol subsidy has made matters worse, as the IMF already had doubts about Islamabad’s ability to raise commercial debt. Overall, Pakistan has received sizable foreign loans, but it seems that they are not sufficient to keep the country afloat until June of this year. If debts are not rolled over and further loans are not received, the country will be forced to default.
