A little more than a week after approving a $3 billion bailout programme for Pakistan, the International Monetary Fund (IMF) has said the country needs another programme and support from other multilateral lenders. Citing that the South Asian country was facing ‘exceptionally high risks’, the lender made the assessment in a recently released 120-page report.
“Resolving Pakistan’s structural challenges, including long-term BOP [balance of payments] pressures, will require continued adjustment and creditor support beyond the current programme period,” said IMF, adding that a successor arrangement was needed to restore the country’s medium-term viability and capacity to repay.
“Pakistan’s economic challenges are complex and multifaceted, and risks are exceptionally high. Addressing them requires steadfast implementation of agreed policies, as well as continued financial support from external partners,” it added.
The Shehbaz Sharif government, despite receiving the green light for the IMF bailout package, is staring at a bleak economic future with forex reserves plummeting.
FM Dar, last week, chaired a meeting of the steering committee and directed the stakeholders to finalise the formalities of outsourcing the operations by August 12, a day before the current government’s tenure ends.
Last week, after months of negotiations, Pakistan managed to clinch a last-minute relief from IMF on an initial $3 billion loan. The development lowers the risk of a sovereign debt default as the South Asian nation continues to grapple with sky-high inflation and staggeringly low exchange reserves.
The agreement aims to support Pakistan’s purported efforts to stabilise the economy from recent external shocks, preserve macroeconomic stability and provide a framework for financing from multilateral and bilateral partners.
“The new Stand-By Arrangement (SBA) will also create space for social and development spending through improved domestic revenue mobilisation and careful spending execution to help address the needs of the Pakistani people,” the IMF said in an official statement.
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