ISLAMABAD: Pakistan People’s Party (PPP) leader Raza Rabbani Monday termed another International Monetary Fund (IMF) bailout for Pakistan as disastrous, saying that the IMF is the fund of imperialist powers.
The former Senate chairman referred to US Secretary of State Mike Pompeo’s statement earlier in which he warned the IMF for providing a bailout to Pakistan.
Speaking to media, Rabbani said, “The imperialist powers want to use IMF and other institutions for their interest.”
The PPP senior leader alleged that it was the agenda of the US to have conflicts prevail in this region and make Pakistan play a certain role.
Referring to Caretaker Finance Minister Shamshad Akhtar’s suggestion that Pakistan might have to approach the IMF after the new government is installed, Rabbani claimed that the caretaker finance minister has exceeded her mandate if she has prepared an IMF package for the country.
He said even if the new government plans on going to the IMF, the issue should be debated in the parliament first.
Pakistan is on the verge of a balance-of-payments crisis, which threatens the stability of its currency and its ability to repay debts or pay for imports.
Pakistan is struggling to avert a currency crisis that has presented the new government with its biggest challenge. Many analysts and business leaders expect that another IMF bailout, the second in five years, will be needed to plug an external financing gap.
Pakistan has had 14 IMF financing programs since 1980, according to fund data, including a $6.7 billion three-year loan program in 2013.
Among the challenges facing the new government, the immediate priority has to be to correct imbalances. A full-year current-account deficit of 5.7 per cent of GDP isn’t exactly a shallow hole, and there’s no guarantee that an 18 per cent drop in the rupee in the past year will do much to fill it.
Talking to Pakistan Today, Pak Kuwait Investment Co AVP Research Adnan Sheikh had highlighted the challenges PTI government is likely to face when it comes into power.
Adnan said, “The previous government’s window dressing has left the real economy in shambles while the informal economy has flourished due to lack of checks and balances. Shifting resources from informal to formal channels will be a painful process and many toes will be stepped on.”
He added, “On the economy front, besides the moonshot of some significant angel financing from friendly countries, we likely have no choice but to go to the IMF and one can expect them to turn the screws tight this time given the lax compliance from the previous bailout.”
Interestingly, when PTI comes into power, it will be severely restricted on the policy and financial front, an immediate visit to the IMF for a bailout cannot be ruled out and the global trend of rising interest rates and increasing oil prices either wouldn’t ameliorate its cause.