Pakistan will get $6 billion for over three years from IMF, a top official said. But experts have warned that the package will bring massive economic hardships for the common people.
Pakistan will get $6 billion from the International Monetary Fund (IMF) over the next three years. An agreement was signed to let the country meet its foreign debt obligations, Pakistan’s finance advisor said.
The deal has come after months of negotiations. It is aimed to support a potential balance-of-payments crisis as the country struggles with a stagnating economy. “Pakistan will get $6 billion from the IMF,” said Pakistan’s advisor on Finance Abdul Hafeez Shaikh. Additionally, the World Bank and Asian Development Bank will help with 2-3 billion dollar in the next three years.
“The trade deficit reached $20 billion. Our foreign exchange reserves have dipped by 50% in past two years. We have a $12 billion gap in our annual payments. We don’t have the capacity to pay them,” added the finance advisor.
Meanwhile, the IMF said that its team reached an agreement on policies. These could be supported by a 39-month Extended Fund Arrangement (EFF) for about $6 billion.
“The program aims to support the authorities’ strategy for stronger and more balanced growth. This can be done by reducing domestic and external imbalances, improving the business environment, and strengthening institutions. Besides, increasing transparency and protecting social spending,” said Ramirez Rigo, head of the IMF delegation.
However, analysts have warned that the 22nd bailout package could come with restrictions. This would bring hardships for Prime Minister Imran Khan, who promised to build an Islamic welfare state. The complications will include high prices of good and utilities including gas and electricity. Besides, the bailout package will also increase fuel prices and further devaluation of rupee.
China has poured billions into the country for infrastructure projects under its Belt and Road Initiative. Thus, the United States has warned that it will keep a close watch over Pakistan. This is to ensure that the country does not use IMF money to repay debts to China.