Cash-strapped Pakistan, IMF fail to reach agreement to unlock bailout funds

Karachi, Pakistan: Cash-strapped Pakistan and the IMF on Thursday failed to reach a clear agreement to unlock crucial bailout funds on the last day of urgent talks in the country, local media said. However, Pakistan’s finance secretary appeared optimistic that a deal would soon be reached to stave off bankruptcy, amid soaring inflation and a shortage of raw industry materials. “An agreement has already been struck with the IMF on prerequisite measures,” Secretary of Finance Hamed Sheikh said, according to the private channel Geo News. The country’s state television channel quoted finance ministry officials as saying some points still need to be addressed. However, the IMF delegation was due to fly out of the country on Friday after ten days of talks, PTV said. 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 International Monetary Fund delegation landed in Islamabad last week to thrash out tough conditions that Prime Minister Shehbaz Sharif called “beyond imagination”. The latest instalment under an already agreed IMF bailout has stalled for months, with the government pleading with friendly nations to help them avoid the painful conditions demanded by the global lender with elections looming. Analysts have warned that rejecting conditions and pushing Pakistan to the brink would have severe political consequences for the ruling parties, but so will agreeing to IMF measures raising the cost of living. On Thursday the central bank released fresh data warning its forex reserves had plunged $170 million in a week, standing at just $2.9 billion as of last Friday. The IMF wants the nuclear-armed nation to boost the pitifully low tax base, end tax exemptions for the export sector, and raise artificially low petrol, electricity and gas prices meant to help low-income families. It is also pushing for Pakistan to keep a sustainable amount of US dollars in the bank through guarantees of further support from friendly nations Saudi Arabia, China and the UAE, as well as the World Bank. The government had earlier indicated that a deal was close, with Pakistan Energy Minister Khurram Dastgir Khan telling the media “I have full hope that these talks will be concluded successfully”. The world’s fifth most populous nation is no longer issuing letters of credit, except for essential food and medicine, causing a backlog of shipping containers at Karachi port stuffed with stock the country can no longer afford. Meanwhile, industries warned the logjam of cargo would increasingly cause factories to shut, having a cascading effect on employment. The IMF had been at loggerheads with Prime Minister Shehbaz Sharif’s government over unlocking the latest tranche of a draft $6.5 billion package agreed upon in 2019. With elections due no later than mid-October, Sharif was wary of ending popular market interventions designed to cushion the cost-of-living crisis for Pakistanis. However, the government finally bowed and loosened controls on the rupee to rein in a rampant black market in US dollars – a step that caused the currency to plunge to a record low – and hiked petrol prices by 16 per cent. Fears of a further price hike have seen hoarding in the country’s largest province of Punjab, pushing minister of state Musadik Malik to report that the government had “no plans to increase the fuel price”. Read all the Latest News, Trending News,  Cricket News, Bollywood News, India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.