The International Monetary Fund has delayed a $6 billion bailout for cash-strapped Pakistan over failure to meet the terms of an earlier deal, officials said Friday, as the country grappled with a worsening economic crisis and a surge lethal of violence.
Pakistani officials said progress had been made towards reviving the bailout. A key portion of the loan, $1.1 billion, has been on hold since December as officials review the country’s compliance with a 2019 deal.
The standoff reflects Pakistan’s struggle for economic stability after summer floods killed 1,739 people, destroyed 2 million homes and caused $30 billion in damages. The impoverished country has also been hit by a wave of violence, including a mosque bombing last month in Peshawar that killed 101 people.
Analysts say the revived IMF bailout will help Pakistan because a release of the next loan tranche could encourage other international financial institutions to help the Islamic nation.
Prime Minister Shahbaz Sharif accuses his predecessor, Imran Khan, now leader of the opposition, of violating the terms of the 2019 agreement. Khan was ousted in a vote of no confidence in parliament in April.
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The IMF delayed a $6 billion bailout for cash-strapped Pakistan due to Pakistan’s failure to meet the requirements of an earlier deal. (Fox News)
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Pakistan wants to avoid default, but is struggling with depleting foreign exchange reserves, which have fallen below $3 billion. Analysts say it is enough just to pay for imports for the next two weeks.
The IMF said in a statement that “virtual discussions will continue in the coming days” to make progress on the deal.
The fund has given new instructions to Pakistan to raise and collect taxes, as well as cut subsidies without burdening the poor, government officials said.
Sharif warned last week that Pakistan would find it difficult to meet the IMF’s terms.
Pakistan’s Finance Minister Ishaq Dar said on Friday that Pakistan would levy Rs 170 billion in additional taxes and cut subsidies to meet the terms of the deal.
