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Updated June 4th, 2023 at 16:09 IST

Pakistan left with 'No plan B' after IMF rejects government's loan request

The International Monetary Fund has reportedly rejected Pakistan’s request to lower the requirement of securing $6 billion in additional loans.

Reported by: Bhagyasree Sengupta
Pakistan PM Shehbaz Sharif (Image: AP)
Pakistan PM Shehbaz Sharif (Image: AP) | Image:self
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In a massive setback to the Shehbaz Sharif administration, the International Monetary Fund has reportedly rejected Pakistan’s request to lower the requirement of securing $6 billion in additional loans. On Thursday, a cabinet minister revealed that the International lending body has rejected to reduce the necessary requirement for securing the loan, The Express Tribune reported. This leaves the government with no alternative but to try and revive the deal once again amid the growing economic crisis. 

Minister of State for Finance Dr. Aisha Pasha addressed the situation in front of the National Assembly Standing Committee on Finance. In a policy statement, Pasha stated that going back to the IMF was the only option left for the government. Earlier this month, it was reported that the international financing body has given an ultimatum to the Shehbaz Sharif administration to resolve the political turmoil before the two parties sit at the negotiation table. According to Pasha, the cash-crunched government requested the IMF to consider reducing the $6 billion external financing requirement, The Express Tribune reported. 

The government supported their request by presenting the IMF with new current account deficit data, however, the lending body did not agree to reduce the requirement. The Pakistani cabinet minister stated that the government wanted the requirement to be arranging $3 billion before the staff-level agreement and the remaining $3 billion after the agreement. Despite the requests, the IMF insisted on “demonstrating the $6 billion", before they proceed further.    

No plan B

The IMF decided not to change its stance even after a long telephonic conversation between Prime Minister Shehbaz Sharif and IMF Managing Director Kristalina Georgieva. This leaves the struggling body with no option but to seek a revival of the deal all over again. 

“There is no option other than going back to the IMF, and I categorically say there is no Plan B,” Pasha reiterated. The minister’s contradicted the previous proclamation made by the country’s Finance Minister Ishaq Dar.

Earlier this month, Dar insisted Pakistan should try to manage with or without help from the International body. 

According to The Express Tribune, of the total $6.5 billion bailout package, the IMF has distributed only $3.9 billion over the span of four years. The poverty-stricken country has already fleeced $4.5 billion from Saudi Arabia, the United Arab Emirates, the World Bank, and Geneva Pledges. However, Pasha noted that IMF can provide the remaining $1.5 billion only after the completion of three pending reviews. 

IMF a Massiah or a body that meddles?  

After the IMF  gave an ultimatum to the Shehbaz Sharif administration to resolve the political turmoil, Pakistan Defence Minister  Khawaja Asif along with other ministers said that IMF is “meddling” with the internal affairs of Pakistan. During an interview with the Pakistani news outlet, Dawn, Asif criticised the comments made by IMF Mission Chief Nathan Porter. Earlier this week, Porter said that the IMF is hoping for a peaceful resolution of the current mayhem in line with the “constitution and the rule of law”. “Obviously, he [Nathan Porter] was talking about Pakistan’s recent political developments,” Asif asserted. Similar sentiments were also expressed by  Pasha earlier this month. "Pakistan is running in accordance with the law," she stressed adding that "the statement by the IMF mission chief to Pakistan is extra-ordinary." "Intervening in Pakistan's internal affairs is not the IMF's mandate," she further added. 

Pakistan is currently facing one of the worse economic crises in recent history. While the inflation in the county is at an all-time high, Pakistan’s federal reserves are exhausting at an exponential rate as well. In the midst of the economic crisis, the country is also facing political turmoil. The tussle between the former Pakistani Prime Minister Imran Khan and the ruling administration has led to violent demonstrations across the nation. With the recent setback,  the Pakistani government has been left in complete shambles.  

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Published June 4th, 2023 at 16:09 IST

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