Pakistan 'Will Have to Agree' to IMF Conditions for Bailout, PM Says

[chinasun]

Pakistan's Prime Minister Shehbaz Sharif said Friday the government would have to agree to IMF bailout conditions that are "beyond imagination."

An International Monetary Fund delegation landed in Pakistan on Tuesday for last-ditch talks to revive vital financial aid that has stalled for months.

The government has held out against tax rises and subsidy slashing demanded by the IMF, fearful of backlash ahead of elections due in October.

"I will not go into the details but will only say that our economic challenge is unimaginable. The conditions we will have to agree to with the IMF are beyond imagination. But we will have to agree with the conditions," Sharif said in televised comments.

Pakistan's economy is in dire straits, stricken by a balance of payments crisis as it attempts to service high levels of external debt, amid political chaos and deteriorating security.

The country's central bank said Thursday its foreign exchange reserves had dropped again to $3.1 billion, which analysts said was enough for less than three weeks of imports.

Data on Wednesday showed year-on-year inflation had risen to a 48-year high, leaving Pakistanis struggling to afford basic food items.

Bowing to pressure

Ahead of the IMF visit, Islamabad began to bow to pressure with the prospect of national bankruptcy looming.

The government loosened controls on the rupee to rein in a rampant black market in U.S. dollars, a step that caused the currency to plunge to a record low. Artificially cheap petrol prices have also been hiked.

The world's fifth-biggest population is no longer issuing letters of credit, except for essential food and medicines, causing a backlog of thousands of shipping containers at Karachi port stuffed with stock the country can no longer afford.

"Accepting IMF conditions will definitely increase prices, but Pakistan has no other choice," analyst Abid Hasan told AFP. "Otherwise, there is a fear of a situation like Sri Lanka and Lebanon."

Rejecting conditions and pushing Pakistan to the brink would have "political consequences" for the ruling parties, but so will agreeing to IMF measures raising the cost of living, he said.

Political chaos

The tumbling economy mirrors Pakistan's political chaos, with former prime minister Imran Khan heaping pressure on the ruling coalition in his bid for early elections while his popularity remains high.

Khan, who was ousted last year in a no-confidence motion, negotiated a multibillion-dollar loan package from the IMF in 2019.

But he reneged on promises to cut subsidies and market interventions that had cushioned the cost-of-living crisis, causing the program to stall.

It is a common pattern in Pakistan, where most people live in rural poverty, with more than two dozen IMF deals brokered and then broken over the decades.

Pakistan 'Will Have to Agree' to IMF Conditions for Bailout, PM Says

Government has held out against tax rises and subsidy slashing

www.google.com

 

[SeaMermaid]

BTW, This is the 13th bailout Pakistan has requested from the IMF. Bailouts are becoming an addiction and creditors are getting tired.

Debt servicing may surge to whopping Rs5.2tr | The Express Tribune

IMF demands Pakistan to raise GST to 18%

tribune.com.pk

But the IMF did not appear confident about the country’s ability to raise roughly $8 billion from capital markets and foreign commercial banks in these challenging times, sources told The Express Tribune.

The government still believed it would raise $1.5 billion by floating Eurobonds and had made it part of the external financing plan.

As against the budgeted over $7 billion foreign commercial loans, the Ministry of Finance still saw $6.3 billion materialising in the current fiscal year, a figure that also appeared highly optimistic.

The IMF was of the view that in present circumstances, it would be difficult to raise $8 billion from the capital markets and foreign commercial banks.

There were also questions whether the government could arrange at least $4 billion for making upcoming debt repayments, excluding rollovers.

It hoped to receive a total $11 billion from the multilateral creditors during the current fiscal year but its materialisation depended upon the revival of the IMF programme.

@epebble @walterbibikow @Raj-Hindustani @INDIAPOSITIVE @Skull and Bones

 

[Skull and Bones]

Even if they get 1.5 billion dollar now, how long will that go to support their import? Barely 2 more weeks. Here's how things will unfold in the coming few weeks, upon failing to garner more financial support from 'allies', State Bank of Pakistan will go on money printing spree, basically diluting the assets and savings of common Pakistanis to buy more dollar in open market to support the essential imports. This is how hyperinflation will look like.

Any Pakistani who is still holding PKR in their bank accounts is committing financial suicide.

 

[epebble]

BTW, This is the 13th bailout Pakistan has requested from the IMF. Bailouts are becoming an addiction and creditors are getting tired.

Debt servicing may surge to whopping Rs5.2tr | The Express Tribune

IMF demands Pakistan to raise GST to 18%

tribune.com.pk

But the IMF did not appear confident about the country’s ability to raise roughly $8 billion from capital markets and foreign commercial banks in these challenging times, sources told The Express Tribune.

The government still believed it would raise $1.5 billion by floating Eurobonds and had made it part of the external financing plan.

As against the budgeted over $7 billion foreign commercial loans, the Ministry of Finance still saw $6.3 billion materialising in the current fiscal year, a figure that also appeared highly optimistic.

The IMF was of the view that in present circumstances, it would be difficult to raise $8 billion from the capital markets and foreign commercial banks.

There were also questions whether the government could arrange at least $4 billion for making upcoming debt repayments, excluding rollovers.

It hoped to receive a total $11 billion from the multilateral creditors during the current fiscal year but its materialisation depended upon the revival of the IMF programme.

@epebble @walterbibikow @Raj-Hindustani @INDIAPOSITIVE @Skull and Bones

Honestly, anyone who loans a dollar to Pakistan must mentally steel themselves that this is a grant and not a loan. Pakistan's problems are result of generations of mismanagement and will take a generation or two to rectify if managed well.

 

[villageidiot]

Honestly, anyone who loans a dollar to Pakistan must mentally steel themselves that this is a grant and not a loan. Pakistan's problems are result of generations of mismanagement and will take a generation or two to rectify if managed well.

We are to the world what greeks are to the EU
Always screwing up

 

[epebble]

We are to the world what greeks are to the EU
Always screwing up

Greece had a near default only once. At least post WW2. Pakistan is in near bankruptcy for a generation or more now. As someone mentioned, this is 13th bailout. In business, this would be considered not a going concern.

 

[nahtanbob]

We are to the world what greeks are to the EU
Always screwing up

the world is not interested in bailing you out like the EU does for Greece

 

[villageidiot]

Greece had a near default only once. At least post WW2. Pakistan is in near bankruptcy for a generation or more now. As someone mentioned, this is 13th bailout. In business, this would be considered not a going concern.

But they are a pain in the a*s, no? That's what I was getting at.

the world is not interested in bailing you out like the EU does for Greece

Thank you for that vote of confidence, Nathu Ram.

BTW, EU doesn't bail Greece out of the goodness of their heart. There's always quid pro quo.
Right now, we don't have much to offer the world, is all.

 

[Kuru]

Right now, we don't have much to offer the world, is all.

Just asking , what are your thoughts on signing the NPT? May be that’s just the thing you have to offer.

 

[El Sidd]

IMF seems addicted to Pakistan. They should cool themselves off

 

[Trango Towers]

I hope we don't get a bailout...I hope people lynch the politicians.
@Amaa'n. Another warning...you are a rubbish mod. Shame on you and I know you have personal issues with me. Look at @waz He didn't give me a warning but you did as you are a 2nd rater and PDM. Shame on you. We love Pakistan and hate your PDM

 

[epebble]

BTW, EU doesn't bail Greece out of the goodness of their heart. There's always quid pro quo.
Right now, we don't have much to offer the world, is all.

There was a lot of reluctance in bailing out Greece. In the end, Germany relented because, if Greece defaulted, German banks would take the hit. Also, the reputation of EU and the monitory union, especially, that of EURO would take a beating. It helped that Greece, though a laggard economically within EU, was not a perennial deadbeat like Pakistan. In Pakistan's case, there is no such safety net beyond the goodwill of Saudi Arabia and UAE. And the problems are much larger and extremely chronic needing at least a decade or more to resolve. Who has the patience and resources to babysit a large country for a decade or two is the mystery.

 

[Trango Towers]

Want to have me exterminated??

Are you are harami general who loves only money, a traitor politician, a midnight judge a rishwat wala policeman ?? If so then yes. If not then no

I think that is very clear.
PS...we love our jawaans and men who protect us

 

[xyxmt]

What bailout this Mofucker is talking about, they used up 16 billions in 9 month but IMF's 1 billion will bail them out....Mian Sherif should have invest in his Kin's education instead of teaching them how to steal manhole covers and make steel then making new manhole covers and sell it to city.

 

[khansaheeb]

When will the fools learn that we have been in the Western camp for over half a century and where has it led us : bankrupt.

happens to every country that went to bed with China. This fate of Pakistan was predictable. Srilanka got screwed and Pakistan too.
So called iron brother is conspicuously absent from any topic related to salvaging Pakistan from financial collapse.
Wonder if such dire terms would have been required had IMF thought moneys were redirected to pay guaranteed returns and interest payments to China on so called CPEC 'projects'

CPEC was sold as beneficial 3 ways to Pakistan - port traffic (Gwadar), road infra and electricty. After 10 years Gwadar is near empty and unable to self sutain. Pakistan has little to show on the electricity grid (in spite of demand being low due to little to no expansion of manufacturing and industry). I don't know about roads, may be they are there.

On the contrary China has benefited 3 ways.
- Guranteed interest payments on loans - In facts last several years loans from GCC and elsewhere were used to service Chinese payments
- Guranteed operational profits ! - yes, whether electricity was wasted or used, whether it was even generated or not, Chinese profits accrued
- Guaranteed project awards - project outlays that included hefty 'project cost margins' - I strongly suspect these were deducted upfront from so called 'chinese investments'

The tragedy is full terms of CPEC have not been made public.

But we see the results. I M F

Problem is not China but corruption in Pakistan that prevents effective utilisation of workers to develop and advance the economy. CPEC has been the greatest and best contribution to Pakistan and the region, India is just reacting like a jealous bit(h.