WASHINGTON: Pakistan appears to be holding off on concluding a deal with the International Monetary Fund (IMF) that could stabilize the economy due to the government’s fear of losing popularity before the elections.
Dawn was told on Monday by diplomatic and official sources that both sides were still talking about the seven demands that the IMF wants Pakistan to accept before it will start providing economic assistance to the country again.
The demands include not blocking LCs, linking gas prices to the global market, free-floating dollars, and the removal of electric subsidies.
According to a source, the government “fears that implementing some of these demands will raise the price of essential items across the board.”
“So close to the elections, it will make the government even less popular than it already is.”
Sui Northern Gas Pipeline Ltd. (SNGPL) and Sui Southern Gas Company (SSGC) have already been granted permission by Pakistan’s power regulator to raise rates by up to 75% with cabinet approval.
The ninth review of a loan arrangement that the previous government made with the IMF is still pending in Islamabad. The review would result in Pakistan receiving the next installment of funds, which has been on hold since September.
The seventh and eighth reviews of Pakistan’s bailout program, which were agreed upon in 2019, were approved by the IMF in August 2022, allowing for the release of more than $1.1 billion.
Officials from the IMF have stated that they are willing to continue working with Pakistan, but the nation needs to fulfill some fundamental requirements first.
A person who was aware of the discussions stated, “They are asking for basics so that they can send their team to Islamabad, but the finance minister is reluctant to do so.”
“Some movement on energy prices and the demonstration of Islamabad’s intent to reform, but Finance Minister Ishaq Dar is not giving an inch,” the official stated.
Islamabad officials called on Prime Minister Shehbaz Sharif to act before it was too late. Another official stated, “This could have been finished four months ago.”
“Does not personally expect much before a caretaker setup takes over the center,” the official stated. When asked why the official replied, The exchange rate will not be allowed to reach market levels, Dar Saheb promises.
Additionally, he stated that “the situation will not normalize” if “we do not have an IMF program.”
An additional official in Islamabad stated It will be disastrous for Pakistan to wait for the IMF to hold talks with the caretakers.