IMF delegation travel to Pakistan as country seeks to restructure debt
A delegation from the International Monetary Fund will arrive in Islamabad today for talks with Pakistan’s government about a potential bailout agreement.
Pakistan is on the verge of a financial crisis. Foreign reserves have fallen by more than 40% since the start of the year, leaving Islamabad with just $8 billion in foreign denominated currency—enough to cover only two months of imports. Islamabad is expected to seek up to $12 billion in loans from the IMF; Prime Minister Imran Khan secured a $6 billion loan from Saudi Arabia last month and a commitment from China for economic assistance last week.
The country’s financial woes have been fuelled by its Chinese debt burden, which has ballooned in recent years as Beijing ramped up investment as part of its Belt and Road Initiative. The fear for the IMF will be that a bailout package for Pakistan will mostly make its way to China.
For Mr Khan, the situation is grim. The PM has already broken an election promise by going to the IMF, while the fiscal restraints imposed by a bailout will prevent Khan from fulfilling other promises, like establishing a welfare state. Thus, just three months into his tenure, an approved IMF bailout may leave Khan’s leadership on shaky ground.
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