Pakistan Expects Relaxation from IMF
The government failed to schedule a review for the release of USD 7 billion loans as part of the IMF Extended Fund Facility.
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Pakistan recently secured loans from all around the world, in the form of relief funds, etc. Additionally, public debt has been rising as well. One of the most immediate threats of this trend is the repayment of USD 1 billion on the maturity of Sukuk bonds. Moreover, Pakistan’s credit rating has plummeted seriously as reported by Arif Habib Limited, with CDS rising to 75.5%. This encompasses an effort to reduce risk on the investor’s part in the form of a contract with another investor.
The precarious situation is further intensified by the rising fiscal deficit and lower tax-to-GDP ratio due to political turmoil and inflation. As Pakistan is requesting waivers on performance from the IMF, thereby relying on their precedence, the state of Pakistan’s economy remains in limbo.
Furthermore, Pakistan has been unable to chart and budget the additional expenses due to floods. This has further delayed the release of $7 Billion from the IMF. Had this been done timely, Pakistan would be in a much better position to fulfill its foreign obligations.
Although the IMF has lauded Pakistan’s fiscal policy measures and accounted for external circumstances for the perilous condition of the country, yet, structural changes in the economy are nowhere to be seen. Pakistan’s participation in the IMF program is the last straw for the economy in the face of defaulting risks, yet the country continues to sabotage itself.
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