Islamabad: Pakistan’s worsening economic situation, political uncertainty and reluctance of the current government to fulfil the pre-conditions to revive the IMF programme, coupled with delays in taking these decisions has added to the already deteriorated financial situation of the country and its global credit rating.
And to add more to the open wounds of Pakistan, the World Bank (WB) has delayed the approval of two loans worth $1.1 billion until the next fiscal year pending some steps on the country’s energy debt and tariffs.
The WB loan approvals have been pending since June last year while Pakistan’s next fiscal year starts in April 2023.
“The major issue is the circular debt management plan in the energy sector and tariff revision. These actions are pending on our side,” said a source in the Ministry of Finance.
The Pakistan government led by Shehbaz Sharif and the Finance Ministry headed by Ishaq Dar have been maintaining that the current financial crisis is not something of their doing and it was created by the former premier Imran Khan during his tenure in government.
And while Dar recently lammed the IMF for not approving the ninth review and releasing the next tranche of the programme, stating that he did not care if the IMF team did not come to Pakistan for the review and insisted that he would not further burden the people with more inflation; he now seems to be agreeing to the fact that Pakistan will most certainly have to take some tough, difficult and unpopular decisions to comply with the IMF pre-conditions, set for the revival of the programme.
One big reason for Pakistan to abide by the IMF terms is that all of its other loans from the WB and other global donors are also directly linked with the IMF programme, which has called on the government to implement more taxes, increase tariffs, increase fuel prices and let the rupee value be established by the market.
But the Pakistan government, which is not only under pressure from the former Prime Minister’s political manoeuvring, which has dissolved both Punjab and Khyber Pakhtunkhwa’s provincial assemblies, demanding early general elections and threatening to further aggravate political uncertainty in the country; the tough decision for revival of the IMF programme after April last year by the coalition government attracted widespread criticism, costing them in terms of political fallout.
And this is why, the government is still reluctant to take more unpopular decisions as it would further worsen the already existing political fallout and support among the masses, which will directly impact their position, narrative and election campaign for the next upcoming general elections in the country.
–IANS