An agreement was reached on a loan of $7 billion in July, but it has not been approved yet. Approval from the IMF’s Executive Board is awaited. A decision on whether to give loan to Pakistan or not will be taken in the Executive Board meeting on September 25. If the Executive Board approves, Pakistan will get a loan of $7 billion in the next 37 months.
In July, when the IMF agreed to give a loan of $7 billion, it had also imposed several conditions. One of the major conditions was to increase the tax on income from farming. Pakistan says that it is ready to accept all the conditions. According to the news agency, the tax on income from farming can be increased from 15% to 45%. Apart from this, the IMF had also put a condition to end the subsidy on electricity bills.
Pakistan Prime Minister Shahbaz Sharif has recently said that his government has fulfilled all the conditions of the IMF.
Is IMF the one causing the ruin?
A bailout package of $7 billion was agreed upon on July 12. But even after two months, it has not been approved.
Now the IMF itself is being accused of deliberately ruining Pakistan. Pakistan’s Deputy Prime Minister Ishaq Dar had recently alleged that the IMF is deliberately not approving the bailout package.
A few days ago, Ishaq Dar had said in a program, ‘I was a minister for 11 months in the previous government. Reviews kept happening. I believe they (IMF) wanted Pakistan to go bankrupt. Our politicians should be careful about this.’
Dar had said, ‘When Pakistan was close to bankruptcy, geo-politics was being played. When our technical review is complete, why should I not raise a finger… why are they wasting our time?’
Also read: Pakistan has accepted PoK as foreign land, what is the affidavit that Rajnath Singh mentioned in JK
Is the IMF deliberately delaying?
Ishaq Dar is accusing the IMF of deliberately delaying the proposal. But is it really so? But it is not so. In fact, the IMF had also laid down two conditions, which Pakistan has failed to fulfill.
The first condition was that the $12 billion debt that Pakistan already owes should be rolled over. Pakistan has to repay a loan of $5 billion from Saudi Arabia, $4 billion from China and $3 billion from UAE. It has not repaid it yet. The IMF wanted this loan to be rolled over. That means the terms of this loan should be decided afresh. While the second condition was to also arrange for $2 billion. Pakistan failed to do so.
However, it is now believed that it has got relief from Saudi, China and UAE. Because Pakistan’s PM Shahbaz Sharif thanked the ‘friendly countries’ in the meeting on 12 September, though not directly but by mentioning this. Sharif especially thanked China for helping in the bailout package.
Economist Fahad Ali told Al Jazeera that Pakistan was in touch with Middle Eastern countries for $2 billion but nothing had been finalised so far.
Not only this, the IMF wanted the electricity subsidy to be abolished. But in August itself, Pakistan’s largest province Punjab has announced a subsidy of 45 billion Pakistani rupees. The Punjab government claims that the expenditure for this subsidy will be made at the provincial level itself.
Also read: …then China’s map would have been different, that policy of the Dragon about which PM Modi cornered it
Why does Pakistan need loan?
– Rising debt: Pakistan is badly caught in the debt trap. According to the State Bank of Pakistan, by June 2024, the country has a debt of more than 71,245 billion Pakistani rupees.
– Below was the Foreign Currency Bhandar: Pakistan’s foreign exchange reserves are also depleting rapidly. According to the report of the State Bank of Pakistan, the foreign exchange reserves were $17.2 billion in 2020-21. Whereas, by 2023-24 it has come down to $9.3 billion.
Continuously falling currency: The Pakistani rupee is continuously weakening. Currently, the price of 1 US dollar has increased to more than 278 Pakistani rupees. Whereas, in May 2022, it was around 185 Pakistani rupees.
– Rampant rising inflation: Inflation in Pakistan is not decreasing. The inflation rate is still around 10 percent there. A few months ago, a report came in which it was claimed that one kg of flour is available in Pakistan for Rs 800.
How big a debtor is Pakistan to the IMF?
Since independence, Pakistan has taken loans from the IMF 23 times. According to the IMF, as of 12 September 2024, Pakistan had a debt of $6.15 billion and was the fifth largest borrower of the IMF.
Argentina was at the first position, which owed IMF $31 billion. Egypt was at the second position with $10.3 billion. Ukraine is at the third position, which had taken a loan of $10.2 billion. Ecuador is at the fourth position, which has taken a loan of $6.4 billion.
Now if the loan of 7 billion dollars is received in the next 37 months, then the total debt on Pakistan will be more than 13 billion dollars. This amount is more than 1 lakh crore rupees in Indian currency. Pakistan is the biggest debtor of IMF in Asia.
Follow us On Social Media Google News and Twitter/X