A new report states that the International Monetary Fund (IMF) intends to ban Pakistan from borrowing more money from China.
Islamabad’s aim to seek $3.7 billion from China for China Pakistan Economic Corridor (CPEC) projects now hangs by a thread and is subject to IMF recommendations.
External doles have been driving Pakistan’s economy making it unsustainable and the country is in dire need of structural reforms. The IMF has objected to Pakistan’s loans from China and extremely high payments made to Chinese independent power producers (IPP). The IMF wants Karachi to renegotiate its energy agreements with Beijing, according to Financial Post.
Multiple Chinese IPPs are operating in the country and Pakistan is under obligation to pay more than $168 billion to them. IMF’s demand follows Beijing’s rejection of modifying the conditions of agreements for projects under the CPEC.
A massive part of the total budget ($19.5 billion) – more than 40 pc of the total federal budget expenditure ($47 billion) has been allocated for debt servicing which is 29.1 pc rise over the previous year.
Pakistan’s budget for FY 2022-23 has failed to set right key structural issues. These are proving to be an obstacle to the revival of the country as it faces a challenging task.
A massive deficit is affecting the country’s economy, inflation is out of hand and a looming threat of loan default hangs like a Damocles sword over the crisis-hit nation. With the IMF deal hanging in balance, the authorities should have endeavoured to take up bold structural reforms, but the budget disappointed, according to Financial Post.
Pakistan Finance Minister Miftah Ismail’s $47 billion federal budget for the fiscal year has barely done anything to fix the fundamental issues that Islamabad’s economy faces.
