Political Instability Delaying Pakistan's IMF Deal
The political situation in Pakistan has become a factor in delaying a agreement with International Monetary Fund (IMF) that may stabilise the national economy.
Diplomatic sources say that global lenders, particularly the IMF, are seeking assurances from Pakistan that the future political setup in the country will respect any agreement they sign with Islamabad.
Pakistan and the IMF have been negotiating the resumption of an installed 7bn US dollarIMF programme for months now but are yet to reach an agreement.
Previous week, Pakistan's Finance Secretary Hamed Yaqoob Sheikh told media that an agreement was likely in the next few days, though Pakistan has missed such timelines in the past as well. Sources said that Pakistan has already implemented a series of policy measures that the IMF suggested, including increased taxes, higher energy prices and increasing interest rates to the highest in 25 years.
But two major issues remain unresolved: financial and political assurances. The International Monetary Fund wants Pakistan to show that it can raise enough financial resources to narrow its balance of payments gap.
According to the sources, China, Saudi Arabia, and other partners have come forward with help offers but the International Monetary Fund thinks it is not enough. The government of Pakistan says that the gap is 5bn dollar, but the IMF believes Pakistan needs 7bn dollar.
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