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IMF refuses to visit Pakistan in new rejection of poor nation, sets conditions for aid

Last updated: January 25, 2023, 11:26 AM IST

If Pakistan and the IMF reach a consensus, Islamabad will immediately receive at least $1.2 billion and Saudi Arabia, the UAE and China along with institutional lenders will also release funds.  (Reuters)

If Pakistan and the IMF reach a consensus, Islamabad will immediately receive at least $1.2 billion and Saudi Arabia, the UAE and China along with institutional lenders will also release funds. (Reuters)

The faltering economy also spells trouble for the political class, as the mini-budget and further taxes could anger the public

Another blow to Pakistan: the International Monetary Fund (IMF) has refused to even visit the poor country and has instead set new conditions for further aid.

As part of its recommendations, the IMF has asked Pakistan to raise new taxes and approve a $200 million mini-budget – moves that could raise inflation and put a greater burden on the common man. Inflation in Pakistan is currently at 25 percentage points and any step that increases the rate could spell political doom in the country.

The international body has said it will visit Pakistan for the ninth assessment once the conditions are met. The next term of the loan also depends on the conditions.

The faltering economy also spells trouble for the political class, as the mini-budget and further taxes could anger the public. This also means bad news for the Imran Khan-led Pakistan Tehreek-e-Insaf (PTI) as the internet government would face the fallout from the IMF.

If Pakistan and the IMF reach a consensus, Islamabad will immediately receive at least $1.2 billion and Saudi Arabia, the UAE and China along with institutional lenders will also release funds. However, if Pakistan does not meet the conditions, the IMF will not approve the rescue package and the friendly countries will also withdraw from any form of aid.

Pakistan’s economy has long been in shambles and coupled with the political uncertainty, it wouldn’t be wrong to say that the country faces a long and arduous struggle to recover.

Pakistan’s foreign exchange hit a record low of $4.56 billion, which can cover just three weeks of imports, according to a report in Geo News. According to Pakistan’s tax authority, prices of essential items have increased dramatically with an increase of 32% year-on-year (YoY) for the week ending January 19, 2023. The sensitive price indicator (SPI) rose by 32%. Pakistan’s current account deficit fell 60 percent to $3.66 billion in the first half (July – December) of the 2022-2023 fiscal year, mainly due to the import bill.

The country is also expected to face a worsening fuel crisis after Italy-based LNG trading company ENI declared it will not be able to deliver its next shipment.

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