In its desperate quest to secure the much-needed IMF bailout, the Pakistan government has imposed several harsh measures on the already overburdened Pakistani public Image Courtesy Reuters
Islamabad: Asserting that Pakistan may find it difficult to secure a much-needed financial bailout from the International Monetary Fund (IMF), the Bank of America has said that the crisis south Asian country may have to seek yet another high-interest loan from China.
“As China and Pakistan have close ties, the hope is rising for China to provide a backstop to its long-term ally. China holds the relief key in the near future as it is the largest creditor,” the Bank of America said in a statement.
China to give another loan to Pakistan
With a total loan amount of $30 billion, China holds the largest share in Pakistan’s overall external foreign debt of $126 billion.
According to data released by the International Monetary Fund (IMF), loans by China is three times larger than Pakistan’s IMF debt of $7.8 billion. This amount also exceeds Pakistan’s total borrowings from the World Bank and Asian Development Bank.
The Industrial and Commercial Bank of China has granted the rollover of a $1.3 billion loan to Pakistan. This rollover is in addition to the loan of $700 billion that the Industrial and Commercial Bank of China had given to Pakistan in the past.
Pakistan economic crisis takes heavy toll on Pakistanis
The Pakistan economic crisis has forced the Pakistani government to implement several harsh measures including increased taxes apart from higher fuel and gas prices in an attempt to persuade the IMF to restart a stalled $6.5 billion loan program. The only other option for Pakistan is high-interest loans from China.
Subsequent record levels of inflation have proved to be a heavy burden on the Pakistani public.
With Pakistan’s foreign exchange reserves at a record low, the country is unable to import essential items such as food and medicines which has caused untold hardships for the common Pakistani.
IMF imposes heavy burden on Pakistan
The Pakistan government has been negotiating with IMF since early last month in a desperate effort to clear the ninth review of the global financial body.
If Pakistan manages to obtain the approval of the IMF board and clears the ninth review, the global financial institution will release $1.1 billion for the Pakistani government, which is part of a $6.5 billion bailout agreement.
This IMF bailout is scheduled to come to a close at the end of the current financial year. the financial year in Pakistan concludes on June 30 each year.
The already crisis-hit Pakistan economy is in for more problems as the International Monetary Fund (IMF) has imposed yet another condition for a crucial financial bailout.
News agency Reuters quoted the IMF’s resident representative as saying that the global financial body has told the Pakistan to give an assurance that its balance of payments deficit is fully financed for the financial year ending in June.
According to the IMF, this condition must be fulfilled if Pakistan is to restart the stalled IMF programme and unlock the next tranche of much-needed funding.
According to media reports, Pakistan has met most of the conditions demanded by the IMF except for the one related to external debt financing.
In its desperate quest to secure the much-needed IMF bailout, the Pakistan government has imposed several harsh measures on the already overburdened Pakistani public. These measures include hiking policy interest rates, reducing government expenses and a big jump in the rates of fuel, gas and electricity.
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