According to Pakistani media such as Gio News on the 9th (local time), the conclusion of negotiations between the Pakistani government and the IMF on the resumption of bailout support has been delayed.”It has been confirmed that the agenda related to Pakistan’s bailout has not been included in the IMF’s board of directors’ agenda until the 17th,” GeoNews reported. It is interpreted that it is very unlikely that negotiations between Pakistan and the IMF will be concluded at least by the 17th.Pakistan agreed with the IMF to provide bailout support in 2019, but has received only part of the $6.5 billion in total aid due to policy disagreements such as restructuring. The $1.18 billion payment scheduled for the end of last year was also put on hold.
Since then, Pakistan has been negotiating with the IMF by pushing for intensive austerity measures, including sharply raising interest rates, taxes, and oil prices to revive its bailout program.In a related development, IMF Vice President Antoinette Saye also said in the middle of last month, “I am confident that the working-level agreement (related to bailout support) will be signed soon.Pakistan’s finance ministry also said at the time that it had “completely completed discussions on all IMF requirements related to bailout support,” but the final conclusion of the negotiations has been repeatedly postponed.
In response, GeoNews quoted a source as saying that the IMF is expressing disagreement over a proposal by major creditor countries to support Pakistan.Pakistan’s external debt is estimated to be about $100 billion, and its major creditors are China, Saudi Arabia, and the United Arab Emirates (UAE).The IMF is said to be in a position that major creditor countries should more certainly guarantee financial support to Pakistan before resuming bailout support.
Pakistan’s 230 million-strong economy has been hit hard by the COVID-19 crisis after suffering from external debt from massive infrastructure investments. The economy collapsed further due to the Ukraine war and the Great Flood last year.The Consumer Price Index (CPI) in April was 36.4%, the highest since statistics were compiled in 1965. As of March, foreign exchange reserves were only $4.3 billion (about 5.68 trillion won). This is a scale that can cover about a month’s worth of imports.
Chang Young Choi
US ASIA JOURNAL
