Pakistan has been facing a deepening economic crisis. Reuters.
Islamabad: Bankrupt and desperate for International Monetary Fund (IMF) financial assistance, Pakistan has decided to plead before the US to help in revival of the stalled loan programme. The decision comes after delay in the staff-level agreement with the global lender.
Over the last few days, the Shehbaz Sharif-led government in the cash-strapped south Asian nation had been putting pressure on its citizens, thereby fulfilling the conditions set by the IMF for a staff-level agreement for the revival $7 billion Extended Fund Facility (EFF) stalled for months.
A report by ARYNews quoted sources within the Pakistan Finance Ministry saying that the Shehbaz Sharif government has decided to seek Washington’s help as the majority of the demands of the fund have been completed.
“There is no need for further delay in the staff-level agreement,” they said, adding that Finance Minister Ishaq Dar will be talking to the US envoy and there is a possibility of a staff-level agreement between Pakistan and IMF later this week.
Sources further claimed that officials from State Bank of Pakistan (SBP) and IMF had held talks on Thursday and discussed the points finalised in the Memorandum of Economic and Financial Policies.
The IMF had asked Pakistan to implement demands before reaching a staff-level agreement for the revival $7 billion Extended Fund Facility stalled for months.
It can be recalled that the US on Thursday (9 March) urged Pakistan to improve its business environment which would make the country more attractive and competitive around the world.
State Department Spokesperson Ned Price last week said the US encourages Pakistan to continue working with the IMF, especially on reforms that will improve Pakistan’s business environment. “We know that doing so will ultimately make Pakistani businesses more attractive and competitive around the world,” he said.
IMF pre-conditions met by Pakistan
The SBP raised the monetary loan interest rate by 300 basis points to 20 per cent – one of the pre-conditions of IMF.
Another IMF pre-condition accepted by Pakistan is increasing electricity rates for consumers of K-Electric (KE) and agricultural community.
The Pakistan government also withdrew the subsidy under the Kissan package. Also, petrol levy has been increased in the country and goods and services (GST) on petroleum, oil and lubricant products as well as luxury item have been increased.
Excise duty on cigarettes has also been raised. Alongwith this, the government has cut expenses of ministers to meet all demands laid by the IMF to unlock the next tranche of bailout package.
Pakistan economic crisis
The economic crisis in Pakistan has been getting worse with every passing moment. As per the latest data, by the end of January, the country’s external debt rose sharply by 38 per cent to PKR 20.69 trillion as compared to the year-ago period.
Pakistan’s external debt was PKR 14.98 trillion in January 2022. The rise in debt was due to massive devaluation in the Pakistani rupee against the US dollar, a report by pkrevenue said.
The Pakistani rupee or PKR witnessed a 51 per cent decline to the greenback as the exchange rate by the end of January 2023 was PKR 267.94 as against PKR 176.74 by end of January 2022.
By the end of January, 2023, the overall debt of the Pakistan government soared to PKR 54.94 trillion. Domestic debt has increased to PKR 34.26 trillion during the same period, while the long-term loans of the country rose to PKR 27.51 trillion.
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