Imran Khan may have come into power claiming to be Pakistan’s messiah and asserting that under his rule Pakistan would not ‘beg or borrow’ from IMF or any other international organization. However, Pakistan’s economic situation has hit rock bottom under his four years of rule and things just seem to be going from bad to worse.
Weeks after the IMF finally issue the next tranche to Pakistan of the original $6 billion loan, and days after Imran Khan went back on all the promises that his government made to the IMF that ensured that this tranche was released, the IMF and Pakistan are, once again, at an impasse.
According to a story in The News, “The International Monetary Fund (IMF) and the government of Pakistan are said to have reached a deadlock amid ongoing talks for the seventh review after the Fund discovered a yawning gap between the cost and official estimates provided by Pakistani authorities for the Prime Minister’s relief package and Kamyab Pakistan Program (KPP). The lender has estimated that the PM’s relief package for slashing down petrol, diesel, and electricity prices as well as doling out of KPP loans would cost almost double the amount of Rs425 billion against official estimates of Rs220 billion only.”
This comes in the backdrop of “foreign currency reserves nosedived by $869 million held by the State Bank of Pakistan (SBP) just in a single week that ended March 18, 2022. The reserves depleting at a supersonic speed poses a serious risk for the eruption of a balance of payment crisis while the country is already going through political turmoil. This yawning gap between the estimates of the IMF and Pakistani side created a stalemate-like situation and both sides so far failed to evolve consensus for striking staff-level agreement.”
Pakistan has a long history of taking loans from the IMF – 23 since 1950 – and an even longer history of not following through on its promises under these loan agreements. Imran Khan’s Samson like policies in every arena – from politics to economics to foreign policy – may help him appeal to his base, but it is going to hurt Pakistan in the long run.