Extreme economic crisis is going on in Pakistan for quite some time Political instability, corruption, dislocation, covid pandemic, global energy crisis and increasing natural disasters due to climate change have combined to make the economy fragile. In such a situation, the Prime Minister of the newly formed government, Shahbaz Sharif, is trying to get another round of rescue funds from the International Monetary Fund (IMF).
“We cannot survive without another round of IMF projects,” he said last week, underscoring the need for fresh loans.
A day before that, IMF officials have taken a preliminary decision to disburse $1.1 billion of the last installment of the previously promised rescue fund of $3 billion to Pakistan.
Meanwhile, the agency said it could plan a medium-term loan scheme for the country if Islamabad applied. However, the government of Pakistan is yet to officially announce the amount of debt they expect for the next bailout fund
Many of Pakistan’s 24 crore people are struggling to meet their daily needs Poor people are in the most trouble Inflation of 30 per cent has caused the prices of daily necessities to rise sharply, while real wages have fallen.
The country’s foreign exchange reserves stood at $8 billion, enough to cover only two months’ worth of imports. Among them, the shaky coalition government formed after February’s elections faces major challenges in dealing with the country’s economy’s chronic structural problems
Mohammad Sohail, chief executive of Karachi-based brokerage company Topline Securities, said, “If the government gets a long-term IMF loan and works according to the terms of the agreement, the economy will turn around.”
The problem, however, is that the IMF’s access to such funds is usually conditional on unpopular programs such as government spending cuts and structural changes to the economy.
Pakistan may need to remove subsidies in the gas and power sectors, increase the tax base and sell off loss-making state companies, Sohail said.
Source: Deutsche Welle
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