ISLAMABAD: International Monetary Fund (IMF) has warned that Pakistan’s high
political uncertainty
and resurgence of social tensions could undermine
economic stabilisation
policies in the cash-strapped country.
“Downside risks remain exceptionally high. While the new government has indicated its intention to continue the SBAs (standby arrangement) policies, political uncertainty remains significant,” the IMF said in a staff report on Friday.
Pakistan had narrowly averted a sovereign
debt default
last summer.
The economy has now stabilised after the completion of the last IMF programme, with inflation coming down to 17% in April from a record 38% in May last year.
IMF officials are expected to visit Pakistan this month to discuss a new loan programme. The
Shehbaz Sharif-led coalition govt
likely to seek at least $6 billion and request additional financing.
According to the global lender, while Pakistan did “broadly achieve its narrow objectives, the challenges ahead remained uncomfortably high and would require sustained efforts to address them”.
The report said that Pakistan’s fiscal and external vulnerabilities remain very high, including debt sustainability and refinancing risks. “Pakistan’s capacity to repay the IMF hinges on strong policy implementation,” the report stated. The report’s language implies that the IMF remains concerned about the sustainability of its loans.
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