Imran faces hard choice of $12 bn IMF bailout

ISLAMABAD’S FOREIGN CURRENCY RESERVES HAVE RAPIDLY DECLINED BECAUSE HIGHER OIL PRICES HAVE PUSHED UP THE COST OF IMPORTS.

ISLAMABAD: Pakistani authorities are finalising plans for the country’s largest bailout of up to $12 billion from the International Monetary Fund (IMF), with senior officials set to present the option to Imran Khan after he takes office, according to a media report on Monday.

However, any loan from the IMF, which officials believe is necessary to resolve Pakistan’s escalating foreign reserves crisis, will see the Washington-based organisation impose severe restrictions on public spending.

An unnamed Pakistan government adviser was quoted by Financial Times as saying: “We are in a rough area and need help. I can’t imagine we could do that without the IMF’S support.”

The adviser said Pakistan is likely to need a loan of between $10 billion and $12 billion in its 13th IMF bailout.

But limits imposed by the IMF will add to difficulties already being faced by Khan in fulfilling some of his election promises, including creating an “Islamic welfare state”, Financial Times reported. Analysts believe a return to the IMF is inevitable and will come with “damaging consequences for short-term economic growth” and Khan’s political reputation.

The news of the possible IMF bailout has triggered a debate on who should be blamed for Pakistan deteriorating state of affairs. Former interior minister Ahsan Iqbal squarely blamed Khan for the situation.

“The Pakistan Tehreek-e-insaf sabotaged the country’s economic progress through repeated agitations and constant blackmail of the government,” Iqbal said. Other analysts said the foreign exchange crisis could be blamed on the military’s reluctance to prosecute international terror groups, earning Pakistan the threat of economic sanctions.

Economist Ashfaque Khan, however, disagreed: “There was mismanagement of the economy at several levels. What we saw was that the Nawaz Sharif government was unwilling to take unpopular decisions because it was on the back foot politically. That is why we find ourselves in this mess today.”