Caught up in the vicious circle of economic and political instability, Pakistan has now sought US’ help to secure “lenient treatment” from the International Monetary Fund (IMF). The request came amid the delay in the staff-level agreement with the global lender to get a bailout package worth over a billion.
After failing to convince the IMF, Islamabad is left with no option but to seek help from the US and its western allies in order to secure a “lenient treatment” from the IMF for moving towards the staff-level agreement, Geo TV reported.
The IMF has been negotiating with Pakistan since early February to clear its ninth review, which if approved by the board will issue $1.1 billion of a $6.5 billion bailout agreed upon in 2019.
However, an IMF’s resident representative was quoted by Reuters as saying earlier this month that “Pakistan will be required to give an assurance that its balance of payments deficit is fully financed for the fiscal year ending in June to unlock the next tranche of IMF funding”.
Pakistan Finance Minister Ishaq Dar had said that the external financing assurance was not one of the IMF’s conditions for clearance of the funding.
The IMF had reportedly asked Pakistan to get confirmation on external financing needs of $6-7 billion from Saudi Arabia, United Arab Emirates (UAE), Qatar and multilateral creditors to fill the gap by the end of June 2023, the Geo TV report added.
Pakistan’s longtime ally China is the only country that has given a loan of $700 million to Islamabad, Dar announced on February 24.
A look Pakistan’s finances
Pakistani Rupee (PKR) was reeling at PKR 281.61 against the dollar on March 13. Its foreign exchange reserves fell to a critically-low level of $2.9 billion a few weeks ago. However, it increased by $487 million to $4.301 billion (in the week ending March 3) with the inflows of Chinese loans, as per official data released on Thursday.
Moreover, Pakistan’s debt jumped by PKR 4 trillion or around 7.7 percent in January 2023 to reach close to PKR 55 trillion, Dawn reported earlier citing State Bank of Pakistan (SBP) data. The country’s external debt stood at PKR 20.69 trillion, witnessing a hike of 38 percent in a year.
The IMF deal plays an important role as the country won’t be able to repay its debts unless it secures funding from the IMF.
This crisis has drastically affected the poor and the middle-class section of society in Pakistan as the hungry and poor Pakistanis have reportedly resorted to armed robberies.
Over 7,000 street crimes reported in Karachi in January
More than 7,000 incidents were reported in January 2023, according to ARY News report. The report said that 13 vehicles were snatched and 214 were stolen in the city during the month. Robbers even snatched 420 motorcycles and 2,379 mobile phones at gunpoint. An alarming rise was witnessed in street crime incidents in Karachi in 2022, the report said.
Pakistan’s Ramadan relief package to ‘reduce difficulties of people’
With skyrocketing inflation, Prime Minister Shehbaz Sharif decided to provide free flour and subsidised petrol to one million residents of Islamabad during Ramadan, Geo Tv reported. This “Ramadan relief package” might come as a hope for the poor and the middle class amid this tail-spinning economy. Shehbaz reportedly directed authorities to finalise and submit the programme.
The Punjab caretaker cabinet also announced the “country’s largest and unique Ramadan relief package”, making a “historic decision to provide free wheat flour to the public during the holy month”.
Under this special package, free wheat flour bags will be provided to families earning less than PKR 60,000. “The families with identity cards will receive three bags of 10kg flour for free during the month of Ramadan,” the report said.
In Punjab, a sack of flour has been available at Rs 860 throughout the year. But now, a 10 kg bag will be available in Ramadan bazaars at a rate of Rs 375, Senior Provincial Minister Abdul Aleem Khan was quoted by Dunya news as saying. He added that sugar, pulses, vegetables and other items will also be discounted up to 25 percent in Ramadan bazaars.
Almost 90 percent of the population in Punjab is expected to benefit from this package.
Ramadan is expected to begin on March 22 or 23 and last for 30 days until April 21 or 22, when the festival of Eid al-Fitr begins.
The development comes a month after the IMF managing director said the poor, and not the rich, must benefit from subsidies if it wants to function as a country.
Source : CNBCTV18