The International Monetary Fund (IMF) is giving the finance minister and the Pakistan government a tough time and its conditions are ‘beyond imagination’, Pakistan Prime Minister Shehbaz Sharif said in a televised address.
“Our economic challenge at this moment is unimaginable. The conditions we have to fulfil are beyond imagination,” Shehbaz Sharif told Pakistani citizens.
The IMF has sent a team to complete the ninth review in order to release the next tranche of its assistance package and the IMF will release $1.18 billion if the review is conducted successfully. More importantly, it will also open doors for Pakistan’s allies to send it economic aid to help arrest the economic crisis.
“I will not go into the details but will only say that our economic challenge is unimaginable. The conditions we will have to agree to with the IMF are beyond imagination. But we will have to agree with the conditions,” Sharif further added.
The Pakistan government led by the Pakistan Democratic Movement (PDM) coalition does not want to commit to rising taxes and slashing subsidies fearing electoral backlash but it currently has no option but to follow IMF’s directions.
The economy is in peril and multiple experts told Pakistan-based news outlets that Islamabad can only afford a few weeks of imports as forex reserves have plummeted further to $3.1 billion. With this reserve, Pakistan can afford only three weeks of imports.
In Karachi, thousands of shipping containers lie stuffed with essential items but cannot reach the Pakistani common man since the government is no longer issuing letters of credit. Letters of credit are being issued but only for essential food and medicines.
Pakistan’s inflation has risen to a 48-year high and a report by Bloomberg said that consumer prices rose 27.55% from a year earlier. This is the highest rise in inflation since 1975.
The IMF mission chief Nathan Porter wants the Pakistan government to bridge the fiscal gap and bring it between PKR2 trillion to PKR2.5 trillion. The Pakistan government has lifted an unofficial price cap on the exchange rate, hiked petroleum rates by up to 16% and increased the LPG price by 30%, in accordance with IMF’s directions.
(with inputs from Dawn and AFP)
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