IMF packages, foreign bailouts will not suffice to keep Pakistan economy afloat: Report
IMF agreement has prevented Pakistan from going into default, at least temporarily, it has also set off a vicious cycle that has happened a few dozen times before in the nation's history, reported The Diplomat. Saudi Arabia made a USD 2 billion deposit into the State Bank of Pakistan (SBP) after the IMF agreement, and the UAE had already committed to making a USD 1 billion contribution.
In addition to the USD 600 million credit that was postponed last week, China rolled over a USD 2.4 billion loan on Thursday. The strategy is essentially the same: commitment to an IMF programme serves as the guarantee that lending states demand, saving Pakistan from a record-high 38 per cent inflation and a decade-low USD 3 billion in foreign reserves that barely cover a month's worth of imports, as per The Diplomat.
The Diplomat is an international current-affairs magazine for the Asia-Pacific region, launched in 2002. However, compared to recent events, this time around, the size of the political factors influencing the frequently regurgitated fiscal cycle is much different.
An IMF plan is often accepted by a newly elected government, which then completes it in the first three years before being derailed by populist measures in the run-up to the following election. This process repeats itself every five years.
Instead, the most recent IMF programme will be executed over the course of nine months by at least three separate administrations. The Pakistan Democratic Movement (PDM) alliance, led by the Pakistan Muslim League-Nawaz (PML-N), which has consented to the IMF deal, is currently in power, but it will soon be replaced by a caretaker administration that will oversee the upcoming general elections, which are scheduled to take place
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