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Pakistan may seek China's help amid uncertainty over IMF bailout package: Report Economic Crisis
Representational image from Wallpaper Cave

Pakistan may seek China's help amid uncertainty over IMF bailout package: Report

India Blooms News Service | @indiablooms | 17 May 2023, 12:43 am

New Delhi: Pakistan may have no choice but to seek assistance from its all-weather ally China to rescue its struggling economy and prevent a full-blown Balance of Payment (BoP) crisis, if the International Monetary Fund (IMF) fails to revive the USD 6.5 billion program, according to a media report.

Sources quoted by The News International stated that policymakers are compelled to consider all available alternatives to prevent a default and protect the economy of over 220 million people.

"Amid deepening political and economic crisis in the country, the IMF (International Monetary Fund) has adopted the policy of wait and see but this policy cannot be pursued for a longer period," a top official source said on Monday.

"Either the IMF will have to be revived through completion of the 9th review or the programme will be scrapped. We will share no more data with the IMF without completion of the ninth review," the official said.

The South Asian nation is facing major challenges in managing its economic crisis.

With limited reserves at the State Bank of Pakistan amounting to only USD 4.38 billion and a fragile balance of payments situation, the International Monetary Fund (IMF) is exercising caution in meeting the country's financing needs.

Despite the government's efforts, the IMF remains unconvinced and has expressed concerns over Pakistan's ability to fulfill the conditions necessary to secure funds from the agreed loan facility.

Additionally, Pakistan is experiencing stagflation, a combination of stagnant economic growth and high inflation, and has been hit by various shocks, including severe floods.

The delay in reaching a staff-level accord has further complicated the situation, as it has been nearly 100 days since the last mission to Pakistan, marking the longest gap since 2008.

The country is currently grappling with high external debt, a weakened local currency, and dwindling foreign exchange reserves, exacerbating its political and economic crisis.