The current IMF programme ends just days away this month. As the deadline looms, the government is making last-ditch attempts to revive the financial assistance package and keep the economy afloat. The global financial institution is unwilling to release the next tranche of funds.
As parts of these efforts, the prime minister personally met the IMF Managing Director in Paris and urged her to release the funds. He stressed that the government has fulfilling all obligations as advised by the IMF. In recent months, the IMF has been displeased with Ishaq Dar-led economic team and even raised concerns over the federal budget.
With no signs that the IMF programme will be revived before September or until the next elections are held, the government is turning towards the much-hyped ‘Plan B’ as it has been left with no option but request friendly countries and bilateral partners. It has so far resisted approaching private creditors such as the Paris Club.
Pakistan urgently needs to bridge financing gap of $3-4 billion and was hoping that Saudi Arabia and UAE would have linked their commitments with the IMF deal. Recently, China agreed to rollover $1 billion and refinance commercial loans. The government is confident of honoring all commitments to its creditors and not default on payments.
The truth remains that Pakistan has no ‘Plan B’ as bilateral countries would be unable to hand over funds without the IMF programme. Finance Minister Ishaq Dar realizing the gravity of the situation has lashed out the IMF, saying the government will not be blackmailed. He said the IMF will only speak to Pakistan after creating a Sri Lanka-like situation.
The civilian and military leadership unveiled an elaborate ‘economic revival plan’ aimed at reviving the economy. It has set up the Special Investment Facilitation Council (SIFE) and even the army chief is part of the PM-led apex committee to devise economic policies and seek foreign investment.
The government needs to finds all way to deal with the economic crisis. It must realize that concerns over an impending default are real. The failure to receive funds from the IMF or friendly countries will aggravate the situation. The government cannot afford to take risks due to political costs amid an election year. There is definitely no ‘Plan C’ as the economy remains on the brink of collapse.
