WASHINGTON: As per the diplomatic sources, Pakistan will be seeking its largest-ever loan package from the International Monetary Fund (IMF). The loan would be up to a staggering 8 billion dollars which the country would be seeking in order to bail itself out from the severe crises that are head bent in crippling the economy.
While giving an interview to a local newspaper, the diplomatic sources said that Pakistan will take its largest loan from the IMF to sort its economic issues that have been harming the country to a great extent. The new government has decided to bail out the nation from the crisis with the help of this loan. However, as per the sources, the International Monetary Fund could place certain strict conditionalities on Pakistan, forcing it to seek other additional loans for meeting those restrictions. And with the additional loans, the original loan facility would expand by 12 dollar billions.
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During the reign of the last government, Pakistan Muslim League Nawaz, Pakistan began exploring the possibility of a loan package with the IMF. During this, several exploratory talks continued under the interim government as well. But any final decision could not be made. However, the decision on the matter emerged as an announcement earlier this week when the new Finance Minister of Pakistan, Asad Umar, confirmed that the government would be seeking an IMF bailout package for the country. He confirmed that this would be the best thing to do in order to save the country out of its foreign currency crisis.
The announcement was made on the Monday night which followed the highest single-day loss in the decade in the stock market. The stock market plunged by over 1,300 points losing almost Rs 270 billion of its capitalization. This single day loss triggered the government to announce its decision on the IMF bailout.
The day after the announcement, on Tuesday, the International Monetary Fund reported having said that it would listen to the request of Pakistan for financial support ‘very, very attentively’ as it has been doing with any member that approached IMF with good standing.
In the past, Pakistan has sought and received more than a dozen financial support packages from the IMF. The last ‘three-year’ package was completed in August 2016 which was of 6.4 dollar billions, 216 percent of Pakistan’s quota at the IMF. All the previous programme also aimed at the mutual objective of bringing down the inflation in the country and reducing the Fiscal deficit to a better and sustainable level. The previous one which was completed in 2016 has the measures to “help achieve higher and more inclusive growth, in particular through addressing bottlenecks in the energy sector”.
Statement by the chief economist of the International Monetary Fund, regarding the IMF bailout which Pakistan is seeking!
During a news briefing on Tuesday, the chief economist of IMF, Mr. Maurice Obstfeld highlighted the challenges in the economy of Pakistan and its consequences that the nation was facing and also made a remark on its ability to finance itself. Mr. Maurice was asked how would the International Monetary Fund react to the request placed by Pakistan for an emergency bailout package. To this, he answered, “As with any member in good standing, they are certainly entitled to request financial support from the Fund. So, we will be listening very, very attentively when and if they come to us.”
He stressed that Pakistan has “frequently… had programs in the past several times… and that is a very good sign going forward”.
This step by the government was bashed brutally by a parade of people!
As soon as the latest news of IMF bailout broke in, people started sharing their two cents on the entire issue. A number of people in Pakistan are of the opinion that this was not a right decision and called this a failure of the government. People are criticizing the government due to the fact because the same party, while it was in opposition, was a strict critic of taking loans from IMF.
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But what we need to realize is that the government is only doing so to take the country and its economy out of the hot waters. Before the conditions worsen, even more, the best decision right now is to seek a major help and help things settle down. But what we miss to see is the enormity of the economic challenges which our country is currently facing and the decisions that he has made till now are just exactly what is needed to be done in order to minimize the challenges in the long run. The massive toll of issues with the current economy of Pakistan has led people to believe that no one can save the economy out of the hot waters it is in now. Also about those who are being highly critical, we have come to a conclusion. The fact is that the finance minister (who in particular people are bashing) is what a doctor is to a drug addict. You might not like him initially for the anti-drugs injections you are given, but at the end of the day, the effects they are going bring to you will be fruitful. Similarly, we might not like this now, but this will be beneficial for the country and its economics in the long term.
We pray and hope that whatever decisions are made for the country will only be beneficial for its economy and the lives of its people. Pakistan Zindabad!