Pakistan PM wants $1.1bn from IMF

The government of Pakistan has once again appealed to the International Monetary Fund (IMF) to release the pending $1.1 billion tranche from the $6.5 billion loan program, which is scheduled to expire at the end of June. Prime Minister Shehbaz Sharif met with IMF Managing Director Kristalina Georgieva in Paris and assured that all the requirements set by the lender have been fulfilled. The prime minister’s office issued a statement stating Pakistan’s full commitment to meeting its obligations and expressing hope for the swift release of funds to support economic stabilisation efforts and provide relief to the people.

Pakistan entered into a $6 billion IMF program in 2019, which was later augmented by an additional $500 million last year. In August 2022, Pakistan received a $1.17 billion tranche as part of the seventh and eighth reviews of the program. Despite an IMF delegation visiting Pakistan earlier this year to negotiate the conditions for the ninth review, the tranche remains undelivered as the program’s expiry date approaches on June 30. Pakistan currently faces significant economic challenges, including a balance-of-payment crisis, currency devaluation, soaring inflation, and impending debt obligations later this year.

With only $4 billion in foreign currency reserves, which is sufficient to cover four weeks of imports, and the currency having depreciated over 50 percent against the US dollar in the past year, Pakistan’s economic situation is dire. Inflation has surged to nearly 38 percent, and the IMF’s global economic outlook report released in April projected a mere 0.5 percent growth for the South Asian country this year, down from six percent in 2022. Despite presenting a $50 billion budget earlier in June, which was deemed “responsible” by the government, the IMF questioned certain policies and referred to it as a “missed opportunity.”

Pakistan is also grappling with political turmoil as it approaches an election year, scheduled to take place by October, with parliament’s tenure set to end in August. The country’s central bank data indicates that it will need to pay over $4 billion by the end of this year alone, with a total of $77 billion due by 2026, according to a recent report by the United States Institute of Peace.