Pakistan in turmoil, IMF's $6 billion bailout programme on hold
With Pakistan in political turmoil, the economic woes of the country have multiplied manifold. The International Monetary Fund's $6 billion programme has been stalled, with no possibility of the next tranche's approval in the ongoing month, Pakistan daily The News reported.
Now, Pakistan will have to manage $5 billion as a bridge financing gap till June to avert a full-fledged balance of payment crisis and manage depleting foreign currency reserves in case the programme continues to be on hold.
After the IMF programme hit the roadblock, Pakistan's other creditors like the World Bank and The Asian Development Bank stopped the budgetary support and attached approval with the IMF's letter of comfort, the website reported.
The Pakistan officials said that only three options are left now which include negotiation for a consensus on the memorandum of financial and economic policies, wait for the elections till July and then extend the IMF programme beyond September or scrap the existing programme and negotiate a fresh deal with the IMF with the new government.
Nevertheless, Pakistan will have to manage $5 billion for the next few months for averting a crisis like situation. “A financing gap of $2 billion would emerge from the IMF as Islamabad envisages external financing from the Fund through approval of seventh and eighth reviews under $6 billion Extended Fund Facility (EFF). Pakistan will have to manage another $3 billion from bilateral donors to bridge the yawning financing gap,” a top official told the Pakistan media outlet.
It is important to note that Pakistan and the IMF were recently holding talks for the completion of the outstanding 7th Review and release of $960 million tranche, which now seems impossible to be accomplished in this month.
“The IMF looks to continue its support to Pakistan and, once a new government is formed, we will engage on policies to promote macroeconomic stability and enquire about intentions vis-a-vis program engagement,"IMF’s Resident Chief, Esther Perez Ruiz said while maintaining that there were no plans to suspend the programme.
But this is not the first time when Pakistan has faced such a challenge. Ahead of the 2018 elections, the IMF had told Pakistan they would negotiate deal with the new government. Then finance minister Shamshad Akhtar had to manage $2 billion from China to meet the balance of payment conditions.
According to the The News, the foreign currency reserves are dwindling and now stand at a meagre $12.04 billion as of March 25. The balance of payment crisis will be knocking at the doors during the elections if the current account deficit continues to escalate.
The North Atlantic Treaty Organisation (Nato) on Wednesday for the first time in its history recognised China's “stated ambitions and coercive policies” as a threat to the alliance's interests, security and values in a sign of the rapid shift in European geopolitical attitudes. The much-anticipated strategic concept, the first since 2010, was released during a historic Nato summit in Madrid that saw the participation of Australia, Japan, New Zealand and Korea.
Russian President Vladimir Putin would not have started the war in Ukraine if he was a woman, said UK Prime Minister Boris Johnson on Wednesday days after G7 members mocked the bare-chested pictures of the Russian leader. During his interview, the British PM also emphasized that everyone wants the Russia-Ukraine war to end. British Prime Minister Boris Johnson asked other leaders sitting around a table. "We all have to show that we're tougher than Putin."
Health officials in South Korea on Wednesday approved the country's first domestically developed COVID-19 vaccine for people 18 years or older, adding another public health tool in the fight against a prolonged pandemic.
Sri Lankan doctors and other medical staff as well as teachers will take to the streets on Wednesday to demand that the government solve a severe fuel shortage at the heart of the South Asian country's worst economic crisis in decades. The government, left with only enough fuel to last about a week, on Tuesday restricted supplies to essential services, like trains, buses and the health sector, for two weeks.
The chief of the outlawed Tehreek-e-Taliban Pakistan has said there won't be a dissolution of or surrender by the group even if the peace talks with the Pakistan government succeeds. In a video released by TTP, its chief, Mufti Noor Wali Mehsud, who has been leading the peace talks for the group, revealed that former Director-General of ISI and Core Commander Peshawar (Gen) Faiz Hameed has been representing the Pakistan government.