ISLAMABAD: Pakistan PM Shehbaz Sharif expressed optimism Tuesday regarding release of IMF‘s final$ 1.1 billion tranche of a$ 3 billion bailout to the country, saying it would bolster economic stability. Pakistan is now eyeing a new, more and larger economic rescue package, but economists cautioned against the country’s continued reliance on outside financial assistance, warning of possible grave consequences.
Following a significant conference of the world bank’s executive committee in Washington late on Monday evening, the IMF approved the immediate launch of the round. All panel members favoured releasing the resources, except India, which abstained.
Pakistan has experienced a severe economic crisis for more than two decades, with inflation peaking at nearly 38 % and international currency reserves running out, enough to handle less than five months of imports.
In order to help Pakistan’s economic stabilization program, the global lender approved a nine-month standby agreement with Pakistan last year. The program’s duration would have allowed for an immediate release of$ 1.2 billion, with the remaining$ 2.5 being phased out after two quarterly reviews.
According to the state broadcaster, PM Sharif cited the IMF loan as being crucial in preventing the nation from default.
Leading analyst Qaiser Bengali questioned the perceived stability, highlighting the transitory nature of the current situation and highlighting the need for serious reforms to address long-term monetary challenges.
Bengali said,” If the so-called security was due to a surge in exports or better flows of cash, that would have been important, but that is not happening,” adding that the business may operate on a system of getting new loans to pay back old loans.
Pakistan’s outside debt obligations exceed$ 130 billion, with concerns raised by economic experts regarding the potential inflationary effect of the country’s debts- driven approach to fiscal deficit management.
