PESHAWAR, Pakistan, Feb 3, 2023 (BSS/AFP) - Pakistan's Prime Minister
Shehbaz Sharif said Friday that the government would have to agree to IMF
bailout conditions that are "beyond imagination".
An International Monetary Fund (IMF) delegation landed in Pakistan on Tuesday
for last ditch talks to revive vital financial aid which has stalled for
The government has held out against tax rises and subsidy slashing demanded
by the IMF, fearful of backlash ahead of elections due in October.
"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
said in televised comments.
Pakistan's economy is in dire straits, stricken by a balance of payments
crisis as it attempts to service high levels of external debt, amid political
chaos and a deteriorating security situation.
The country's central bank said Thursday its foreign exchange reserves had
dropped again to $3.1 billion dollars, which analysts said was enough for
less than three weeks of imports.
On Wednesday, year-on-year inflation had risen to a 48-year high leaving
Pakistanis struggling to afford basic food items.
Ahead of the IMF visit, Islamabad began to bow to pressure with the prospect
of national bankruptcy looming and no friendly countries willing to offer
less painful bailouts.
The government loosened controls on the rupee to rein in a rampant black
market in US dollars, a step that caused the currency to plunge to a record
low. Artificially cheap petrol prices have also been hiked.
The world's fifth-biggest population is no longer issuing letters of credit,
except for essential food and medicines, causing a backlog of thousands of
shipping containers at Karachi port stuffed with stock the country can no
-Political chaos -
The tumbling economy mirrors the country's political chaos, with former prime
minister Imran Khan heaping pressure on the ruling coalition in his bid for
early elections while his popularity remains high.
Khan, who was ousted last year in a no-confidence motion, negotiated a multi-
billion-dollar loan package from the IMF in 2019.
But he reneged on promises to cut subsidies and market interventions that had
cushioned the cost-of-living crisis, causing the programme to stall.
It is a common pattern in Pakistan, where most people live in rural poverty,
with more than two dozen IMF deals brokered and then broken over the decades.