Will IMF continue its assistance to Pakistan amid deepening political crisis?

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Doubts have risen over the International Monetary Fund (IMF)'s approval of the next tranche of its $6 billion assistance programme to Pakistan as the country’s political crisis deepens.</p>
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“In the wake of heightening political temperature in Pakistan, the IMF-sponsored $6 billion programme has turned into a stalled mode, with no possibility for approval of the next tranche within the ongoing month,” <a href="https://www.thenews.com.pk/print/947573-political-vacuum-makes-imf-noncommittal-on-next-tranche" rel="nofollow">the News International</a> said.</p>
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<strong>However, Pakistan’s finance ministry in its tweet has said that talks with the IMF on data sharing and reform discussion are continuing. “There is no truth to speculation about the suspension of the programme. IMF has also confirmed the same and also clarified that it remains committed to Pakistan’s macroeconomic stability,” it said.</strong></p>
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On Sunday Prime Minister Imran Khan dissolved Parliament and called for early elections.</p>
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While in 2019, IMF agreed for a bailout package, it halted assistance in January 2020, after Pakistan Prime Minister Imran Khan refused to increase electricity tariff and impose additional taxes as prescribed by the multilateral agency.</p>
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<strong>Also read: <a href="https://www.indianarrative.com/world-news/opposition-knocks-at-army-chief-bajwa-s-door-after-imran-khan-accuses-it-of-treason-162179.html">Opposition knocks at Army Chief Bajwa’s door after Imran Khan accuses it of treason</a></strong></p>
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However, the PTI government in January finally passed the Supplementary Finance Budget — touted as a mini budget — increasing tax rates for many items as prescribed by the IMF.</p>
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Pakistan owes about $11.54 billion to the Paris Club lending countries that include $1.42 billion to Germany, $175 million to Italy, $5 million to the UK besides $403 million to Canada.</p>
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Economic growth and political stability are intertwined.</p>
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The Pakistani rupee has depreciated steadily in the last one month. At present, the rupee is pegged at about 184 to a US dollar. In March alone, the value of the rupee has eroded by 3.2 per cent.</p>
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The country’s foreign exchange reserves have also fallen in March, as Islamabad repaid a chunk of external debt, which includes a syndicated loan facility from China. According to the SBP data, the foreign exchange reserves as on March 25 was at $18.554 billion — the lowest since October, 2020. In the beginning of March Pakistan’s forex reserves stood at $22.668 billion while in July it was $24.776 billion.</p>