Last Updated: January 25, 2023, 11:26 IST
In yet another blow for Pakistan, the International Monetary Fund (IMF) has refused to even visit the cash-strapped country and instead placed new conditions to extend further help.
As part of its recommendations, IMF has asked Pakistan to levy new taxes and pass a mini budget for 200 million — steps that could raise the inflation rate and put more burden on the common man. Inflation in Pakistan is currently at 25 percentage points and any steps that may increase the rate could spell political doom in the country.
The international body has said it will visit Pakistan for the ninth review as soon as the conditions are met. The next instalment of the loan also depends on the conditions.
The tottering economy also spells trouble for the political class as the mini budget and further taxation could anger the public. This also means bad news for the Imran Khan-led Pakistan Tehreek-e-Insaf (PTI) as the net government would have to deal with the ramifications of the IMF could shoulder.
If Pakistan and the IMF reach a consensus, Islamabad will immediately receive at least $1.2bn and Saudi Arabia, UAE and China along with institutional lenders will also release funds. However, if Pakistan fails to honour the conditions, IMF will not sanction the bailout package and the friendly countries will also pull back from any kind of help.
Pakistan’s economy has been in shambles since long and coupled with the political uncertainty, it would not be wrong to say that the country faces a long and tough battle ahead to recover.
According to a report in Geo News, Pakistan’s foreign exchange reached a record low of $4.56 billion, which can cover only three weeks of imports. Prices of essential items have increased drastically with Sensitive Price indicator (SPI) up 32% Year on Year (YoY) for week ending January 19, 2023, according to Pakistan Revenue. Pakistan’s current account deficit has plunged by 60 per cent to $3.66 billion in first half (July – December) of fiscal year 2022-2023, mainly due to its import bill.
The country is also expected to face a worse fuel crisis after Italy-based LNG trading company ENI stated that it won’t be able to deliver its next cargo.
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