Pakistan has sought an emergency bail-out from the International Monetary Fund, a humiliating step forced on Islamabad after allies refused to come up with cash to prevent the country going bust.
The IMF confirmed last week that Pakistan had sought funds to meet balance of payments difficulties. It is expected to provide $5-billion or more for the coming year, with billions more for subsequent years.
Pakistan’s Finance Minister, Shaukat Tareen, said recently that going to the IMF was his “plan C”, but Islamabad has been stung by rebuffs from its closest international partners — China, the United States and Saudi Arabia — leaving it with few choices. Past IMF programmes, requiring Pakistan to agree to austerity measures, were deeply unpopular. The previous regime, of president Pervez Musharraf, had trumpeted its break from this source of finance.
“Musharraf, everyone, celebrated that Pakistan had graduated out of IMF programmes. He said he had ‘broken the begging bowl’,” said Faisal Bari, a professor of economics at the Lahore University of Management Sciences. “Going back to the IMF means that the country is carrying the begging bowl again, that it is not on a path of sustainable growth.”
Pakistan’s foreign exchange reserves will run out within about seven weeks, meaning that it will not be able to meet external debt payments, making it bankrupt. The restoration of democracy, with elections in February, coincided with an economic collapse that has sent inflation soaring and the rupee plunging. Islamabad had hoped that, as a frontline state in the “war on terror”, allies would come to its aid. —