More Loans For Pakistan From IMF Will Further Destabilize Economy
More Loans For Pakistan From IMF Will Further Destabilize Economy: Due to government lack of stable economic policies Pakistan fell into fiscal and account deficits while multiplying the external debts. To avoid default like situation Pakistani government has asked International Monetary Fund (IMF) to help once again with “More Loans”. This favor is expected to materialize on terms during World Bank and IMF spring meetings in Washington.
The government is of view that this is the only way to readjust the depreciated currency. There is a huge possibility that the authorities will go for more depreciation in ruppee before June.
Loan Emergency: Ministry of Finance would be seeking $6-7 billion in IMF support to make timely compensations and deal with the pending balance of payments crisis. Officials from ministry of finance gave another option before going for more loans and that is acquiring commercial loans.
Commercial Loans: A total of $1.3 billion in commercial loans had been acquired in the last few months which included $900 million in a quarter.
Economic Mess
IMF has been demanding Pakistani officials to make currency down by 13%. IMF backed Pakistani economy during the three-year $6.67 billion Extended Fund Facility that ended in September 2016.
Post-program Monitoring Report By the IMF states that the widening fiscal and external deficits could land Pakistan into new trouble. Pakistan is facing economic challenges and “balance of payments” seems to be the most challenging one.
When the government will complete its five years tenure the external debt and liabilities would be crossing $100 billion including the $2.5 billion due to the recent fall of rupee.
IMF officials are more concerned about getting back their $6.6 billion and seeking for more loans would mean
- government to be implementing taxation and energy related reforms under IMF terms
- cutting of development budget to restrict fiscal deficit
- Deficit will go 7% high which may end up at 8% considering the huge resources being given to PML-N legislators to win elections