The International Monetary Fund (IMF) has expressed doubts regarding Pakistan’s ability to repay its loans, citing major debt-repayment challenges and significant risks in the country’s economic landscape.
According to a media report, the IMF’s assessment of Pakistan’s economy highlights the country’s cash-strapped situation and the challenges it faces in meeting its debt obligations. The IMF’s concerns come as a support team from the organization arrived in Pakistan to hold talks regarding a potential new bailout package.
The IMF’s staff report emphasizes the critical nature of policy implementation and timely external financing for Pakistan’s capacity to repay the fund. Factors such as delayed reforms, high public debt, gross financing needs, low reserves, and geopolitical instability contribute to the risks identified by the IMF.
The report underlines the necessity of restoring external viability to ensure Pakistan’s repayment capacity, emphasizing the importance of strong policy implementation and external asset accumulation. However, the IMF notes that uncertainty surrounding global financial conditions has somewhat diminished since the last review.
Pakistan is projected to require substantial gross financing of USD 123 billion over the next five years, with planned borrowing amounts increasing annually. The country’s efforts to seek rollovers of debt from key allies like China, Saudi Arabia, and the UAE aim to address the significant gap in external financing.
Negotiations for a new loan programme with the IMF are expected to begin soon, with Pakistan aiming to achieve budget targets and stabilize its economy after narrowly averting default last year. While inflation has decreased, challenges such as fiscal shortfalls and stagnating growth persist.
The IMF’s assessment underscores the urgency for Pakistan to accelerate reforms and address its financial vulnerabilities to ensure long-term economic stability and debt sustainability. As discussions with the IMF progress, Pakistan faces critical decisions regarding its economic policies and external financing strategies.
Sources By Agencies
