The Long Wait: What’s Holding Up Pakistan’s IMF Loan Approval?
In July, Pakistan celebrated a $7bn, three-year loan agreement with the IMF as a lifeline amidst economic turmoil. But two months on, the deal is still pending IMF board approval, sparking concerns of unmet bailout conditions.
Deputy Prime Minister Ishaq Dar blamed the delay on the IMF’s deliberate tactics, adding to the uncertainty surrounding the approval status.
Pakistan’s economic woes
Pakistan’s economic woes stem from political instability and a failure to meet IMF conditions in the past. Despite efforts to stabilize the economy, including securing a $3bn Stand-by Agreement in June 2023, challenges with debt rollovers and additional financing have stalled the current loan approval.
Why the delay?
Experts point to Pakistan’s struggles in securing debt rollovers and additional financing as key barriers to IMF approval. Geopolitical factors and uncertain energy subsidies add to the complexity of the situation.
Geopolitical hurdles
Pakistan’s close ties with China and perceived US influence over the IMF have raised questions about the approval delay. While possible repercussions of a failed deal are debated, the need for continued IMF support to avoid default remains paramount.
Rana, an economic analyst, suggests Pakistan may have until November to secure IMF support or consider debt restructuring to mitigate default risks.