Why broke Pakistan is struggling to get foreign loans
With the rapid changes in the geopolitical order, Pakistan’s access to external financial assistance is becoming more difficult this time. Pakistan’s repeated habit of asking for bailouts is no longer maintained following the brutal economic impact of the Covid 19 pandemic and the ongoing Russian-Ukrainian conflict. Growing uncertainties have prompted countries around the world to focus on strengthening their own macroeconomic fundamentals. Consequently, countries, including those in the West Asian region that have been Islamabad’s traditional allies and easy lenders, are no longer willing to accept Pakistan’s repeated demands for bailouts.
The Shehbaz Sharif government has implemented most of the recommendations made by the International Monetary Fund, but sources said there may be a few still pending. Although Pakistani Finance Minister Miftah Ismail said the IMF loan would arrive at the end of August, he had previously expressed hope of receiving the package by June.
According to reports, Pakistani military leader, General Qamar Javed Bajwa has now stepped in and requested US support to secure the IMF loan amid dwindling foreign exchange reserves. Bajwa last week spoke with US Under Secretary of State Wendy Sherman on the issue.
Data released by the State Bank of Pakistan (SBP) showed that reserves fell by $754 million between July 15 and July 22. On July 22, the foreign currency reserves held by the country’s central bank stood at $8,575.16 million. This has raised serious concerns among policy makers in the country.
In January, it was $16,607 million. The country has now decided to sell shares of public entities to friendly countries with a view to raising resources.
Although Islamabad talks with the IMF for a bailout package have concluded with the multilateral agency, the delay in disbursement has raised concerns.
“It is important to note in which direction the country’s military is tilted, which position Bajwa occupies is more critical for any such decision,” Abhijnan Rej, a researcher and consultant specializing in security and geopolitics, told India Narrative. Asians. “The IMF will also be affected in this capacity,” he said, adding that the loan from the multilateral agency would materialize, however. “I suspect there are a few more bottlenecks that need to be worked out and that’s why it’s taking time,” Rej added.
However, he stressed that donor countries will adopt extreme caution, given the current global uncertainties. Interestingly, so far Pakistan has benefited from IMF assistance more than 20 times.
pakistan local newspaper Dawn declared that the Arab monarchies were now interested in pursuing a radical transformation of their economy, society and foreign policy. “The monarchies were now concerned about the return on investment of their allies, including Pakistan. Unfortunately for them, the economic and geopolitical returns of the recent past were in the red,” he said.
He noted that China too had now developed “a more nuanced and jaded view of Pakistan and what its elites could offer”.
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