Islamabad: All eyes in Pakistan are on the important and crucial meeting of the executive board of the International Monetary Fund (IMF), which is to be held today. The IMF will take a decision on a bailout package for Pakistan which is flooded from the monsoon rain, further impeding its economy.
Pakistan is desperately looking toward the final decision of the IMF as it claims to have completed all requirements of the IMF deal, which is linked with at least $37 billion in loans and investments in the country.
As per details, if the IMF approves the revival of the bailout package, it will be immediately disbursing $1.2 billion with an additional $4 billion during the current financial year.“The board is likely to approve the disbursement of the 8th and 9th tranche on Monday. Not doing so will send a negative signal, particularly during the floods”, a source with knowledge about the IMF deal told ABP Live.
The source further revealed that Pakistan may also request emergency help from the IMF’s Rapid Financing Instrument (RFI), which is likely to bring in an additional $500 million.
Pakistan Business Council said despite allies disbursing funds, the balance of payments crisis may not ease for Pakistan.
“With the scale of the flood from heavier-than-usual monsoon rains means that the country will need more financing than it had planned,” Pakistan Business Council said.It should be noted that the IMF board approved the disbursal of $1.386 billion to Pakistan in April 2022. This was done under the RFI to cater for the economic impact of the COVID-19 virus.The current deal with the IMF holds great value for Pakistan as the country is looking toward materialising loans and investments worth $37 billion, pivotal to getting the country away from the kind of financial collapse like the one that happened in Sri Lanka.
Financial Commitment From Other Sources
In the past six weeks, Pakistan has secured loans, financing, deferred oil payments and investment commitments of about $12 billion from countries including China, Saudi Arabia, Qatar and the United Arab Emirates (UAE). This was done to avoid the country from moving toward bankruptcy and default.However, these financial commitments are pending materialisation and availability only after the IMF executive board approves the bailout deal with Pakistan.Financial experts believe that Pakistan’s economy is broad and deep in its geostrategic position, which is strong enough to avoid default.
“Despite differences, Washington still supports the loans through the IMF because a crisis on Afghanistan’s border is not something that the US wants to see”, said Tamanna Salikuddin, director of South Asia programs at the United States Institute of Peace (USIP).However, Tamanna added that Pakistan’s critical geostrategic importance and relevance also keeps the tendency of its political setup to make irresponsible economic decisions, which is because the political leadership in the country perhaps believes that the country is too big and important to fail.
The same concern was also highlighted by the IMF source, who said that the political government and its opposition forces need to end fighting each other over everything if they want to stabilize the country.