Pakistan independent of IMF and unlikely to complete prime minister’s term, IIF report
Dr. Akhtar Gulfam
LONDON/WASHINGTON: The Institute of International Finance (IIF) has said that Pakistan is on track to miss targets in the current fiscal year amid political instability caused by a weak coalition government and allegations of election rigging. The biggest challenge now is financial stability and reforms.
On the other hand, exchange rates, monetary policy, energy subsidies, and state-owned enterprises, says the IIF, a global body of financial institutions comprising the world’s largest commercial and investment banks, insurance companies, and investment management firms. (SOE) reforms are unlikely to stand in the way of a new International Monetary Fund (IMF) program given the good progress made over the past year.
The IIF said that political tension and unstable politics would increase the risks facing Pakistan, including the suspension of mobile phone services during the elections, delays in the release of results, mass protests, a deadly bomb blast, and the Pakistan Tehreek-e-Insaf (PTI). The election, marred by the failure to allocate certain seats to PTI-backed independent candidates, has heightened tensions within the country.
He said that it is clear that Imran Khan is the most popular politician in Pakistan and this has created differences between the powerful army and Imran Khan.
The report predicts further escalation of tensions between the two sides, which could lead to another round of heavy military crackdowns on PTI-backed politicians and supporters, as well as coalition forces. Government weakness is also included in this.
The IIF said the PPP appeared reluctant to sign on to politically difficult reforms and it was difficult for the Muslim League (N) to move forward without their support, which would hamper negotiations with the IMF and may or may prolong it.
History has also not been kind to the government or the IMF’s new program, it said, as no prime minister in Pakistan has completed his five-year term to date, while Pakistan has been in power since 1958. Now in its 23rd IMF program, it’s a formidable track record that shows no signs of breaking any time soon.
About $90 billion of public debt is due to mature in FY24, a large portion of which is expected to roll over, according to the IIF.
According to the IIF, the biggest challenge will come in the form of financial stability, which it said is of particular importance because the public debt was 55 percent of GDP in the fiscal year 2009-10 due to large fiscal deficits. increased to 79 percent in 2022-2023.
