Pakistan’s economy is in serious trouble, plagued by a balance of payments crisis. (file)
Washington:
The IMF said on Friday that progress had been made during crisis talks with cash-strapped Pakistan but no deal was announced as he completed an urgent visit to the country. Islamabad agreed a $6.5 billion loan package with the international lender in 2019 and has been struggling to unlock a critical tranche of cash as the threat of national bankruptcy looms.
“During the mission, considerable progress was made on policy measures to address domestic and external imbalances,” the IMF statement said.
“The virtual discussions will continue in the coming days to finalize the implementation details of these policies.”
Pakistan’s economy is in dire straits, plagued by a balance of payments crisis, as it attempts to service high levels of external debt amid political chaos and deteriorating security.
An International Monetary Fund (IMF) delegation arrived last week to face difficult conditions, which Prime Minister Shehbaz Sharif called “beyond imagination”.
Talks on the latest loan tranche have been stalled for months as the government pleads with allies to help it avoid painful demands from the global lender ahead of elections later this year.
Analysts have warned that rejecting the terms and marginalizing Pakistan would have serious political consequences for ruling parties but would agree to IMF measures that raise the cost of living.
On Thursday, the central bank released fresh data, warning that its foreign exchange reserves had declined by $170 million in a week, compared with just $2.9 billion last Friday.
The IMF wants the nuclear-armed nation to boost its low tax base, end tax breaks for the export sector, and artificially lower petrol, electricity and gas prices to help low-income households.
It is also pushing Pakistan to keep a sustainable amount of US dollars in the bank through guarantees from friendly countries Saudi Arabia, China and the United Arab Emirates, as well as further support from the World Bank.
The world’s fifth-most populous country is no longer issuing letters of credit, except for essential food and medicines, leading to a backlog of shipping containers at the port of Karachi that the stock-laden country can no longer afford.
Meanwhile, industries warned that the cargo holddown would lead to faster factory shutdowns, which would have a cascading effect on employment.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
featured video of the day
Dalit woman in Karnataka tied to a pole and thrashed after cows came to her field