Vengeful politics, weary friends prevent IMF from $7 bn dole to Pakistan

Pakistani media is reporting that the IMF agreement with Pakistan, which has been on the verge of materialising for the past many days, is not happening simply because of political instability

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The political turmoil brought about by former prime minister Imran Khan's wranglings with Pakistan's two big parties - Pakistan Muslim League-Nawaz (PML-N) and the Pakistan People's Party (PPP) - in an economically unstable nation is finally impacting its diplomatic dealings.

Prime Minister Shehbaz Sharif on Monday issued a terse statement through his office's media wing saying that Khan's antics have created hurdles in the way of the country's efforts to acquire a loan from the International Monetary Fund (IMF). His Finance Minister, Ishaq Dar, too has blamed Khan's mismanagement for the country's dire economic situation many times in recent days, also insinuating that the IMF is holding back on the bailout loan because of political instability.

It is not just Imran Khan. Also on the political horizon are the provincial elections in Khyber Pakhtunkhwa and Punjab, both of which have recently witnessed an upsurge in violence. These will be followed by general elections towards the end of the year - making it very difficult for the IMF to decide on releasing a loan in unpredictable conditions.

Pakistani media is reporting that the IMF agreement with Pakistan, which has been on the verge of materialising for the past many days, is not happening simply because of political instability. Reportedly, the IMF wants an assurance from the country that any future dispensation in the country will respect the agreement signed now for a $7 billion fund.

With rancour between various political parties being displayed in the open, the IMF is unlikely to get an assurance from different politicians, particularly Khan's Pakistan Tehreek-e-Insaf (PTI), that they will abide by the IMF conditions.

Another possible reason for the delay in the IMF loan is the international lender's condition that Pakistan's bilateral lenders should provide pledges to restructure its existing loans. China, the main lender and a staunch economic partner to Pakistan, remains non-committal about restructuring Pakistan's debt. Beijing is showing the same indifference toward Pakistan that it has shown with its other strategic friend in South Asia - Sri Lanka. Despite signing a staff-level agreement with the IMF in September 2022, the Indian Ocean island nation is still waiting for the IMF loan as Beijing has not supported Colombo in restructuring its bilateral debt.

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Rising violence in border areas with Afghanistan, increasing nationalism in Balochistan and Sindh, as well as its politics of attrition, Pakistan's friends with deep pockets in the Gulf are not keen to commit more support. Over the last many months, friendly countries have instead made noises that they are looking at investing in Pakistan but not providing easy money.

The Gulf nations, including Saudi Arabia and also Qatar, have taken notice of the powerful nationalist movement in Balochistan where the Baloch fighters have pinned down Pakistan's security forces in an ever-lasting conflict. The nationalist movement in Balochistan has ensured that Islamabad's relations with Beijing have touched rock bottom as attacks have mounted on Chinese nationals working to implement the grand $64 billion vision of Chinese President Xi Jinping through the China Pakistan Economic Corridor (CPEC).

The CPEC is a grand economic and diplomatic failure for Pakistan as well as China as both stare at economic losses and unfulfilled dreams.

The US is the other friendly nation that has been approached by the ruling dispensation. It is being reported that Foreign Minister Bilawal Bhutto on his visit to New York on the International Women's Day sought Washington's intervention in persuading the IMF for an early loan. Back home in Islamabad, the finance ministry has reportedly reached out to US officials for ending the stalemate with the IMF.

Just yesterday American ambassador to Pakistan, Donald Blome too assured Islamabad that the US is keen to help the country get the IMF loan.

As friendly countries play safe with Pakistan, and its own politicians pave the way for the nation with good intentions, the IMF seems to be waiting and playing safe with a country that has already taken at least 22 IMF loans and is eagerly awaiting its 23rd amidst political turmoil, bad governance, rising violence and economic uncertainty.

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First Published: Mar 16 2023 | 1:55 PM IST