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Pakistan in worst economic crisis since formation, faces massive disaster


Islamabad: With its foreign exchange reserves on their last leg amidst a severe shortage of food and medicines, Pakistan is currently at the beginning of the worst economic crisis since the country’s formation in 1947.

According to a report by Geo-politik, unless China or Saudi Arabia come up with a substantial bailout package, Pakistan may face a disaster like never before.

A delegation from the International Monetary Fund (IMF) has already visited Pakistan to assess the country’s financial systems ahead of a possible financial bailout.

However, serious questions have been raised about the Pakistan government’s capacity and capability to recover from this economic dead-end as till now, the country has taken 14 loans from the International Monetary Fund (IMF), but none of them has ever been fully returned.

Pakistan’s ruling alliance led by PM Shehbaz Sharif has been delaying the imposition of tough economic measures demanded by the IMF over fears of a possible public backlash with elections due later this year. This had delayed the IMF’s loan programme by several months.

However, with the Pakistan economic crisis increasingly spiralling out of control, the Pakistani government has been forced to take certain tough decisions.

Last month, Pakistan Prime Minister Shehbaz Sharif said that the ruling PDM alliance was ready to sacrifice its “political career for the sake of the country” and implement the “stringent” conditions of the International Monetary Fund (IMF) in order to improve the chances of a much needed financial bailout.

According to an ANI report, the latest negotiations between IMF officials and the Pakistan government was held via video link.

However, the IMF is not willing to relax the tough conditions it has set for Pakistan and will not release the next tranche of its loan unless the South Asian country keeps its promises.

If Pakistan manages to fulfil all the conditions demanded by the IMF, it will receive $1.2 billion from the global financial body. Pakistan’s chances of getting additional funding from Saudi Arabia, UAE, China, and other institutional lenders may also improve.

However, such a scenario may seem unlikely in view of Pakistan’s embarrassing track record of failing to meet IMF conditions.

The current Pakistan economic crisis has been persisting for over three years now. The suspension of a bailout package by the IMF in 2020, the devastating floods last year and political mismanagement leading to an economic crisis in 2022 have served to compound the problem.

In the first round of talks, the IMF has reportedly said that it will share nine tables, comprising macroeconomic and fiscal framework, with the Pakistan government, which is expected to facilitate the holding of policy-level talks next week.

Source : Firstpost