Peshawar: Pakistan’s Prime Minister Shehbaz Sharif has warned that the country will have to brace itself for even tougher times as his government strives to meet the stringent conditions laid down by the International Monetary Fund (IMF) for a possible financial bailout.
According to an AFP report, Shehbaz Sharif said on Friday that the bailout conditions put forward for Pakistan by the IMF are “beyond imagination”.
“I will not go into the details but will only say that our economic challenge is unimaginable. The conditions we will have to agree to with the IMF are beyond imagination. But we will have to agree with the conditions,” Shehbaz Sharif told the media.
A delegation from the International Monetary Fund (IMF) arrived in Islamabad last Tuesday for a dialogue with the Pakistan authorities and a review of the country’s financial systems in a last ditch attempt to revive a vital financial bailout package which has been stalled for several months now.
With elections due in October, the ruling coalition led by PM Shehbaz Sharif tried to hold out against harsh IMF conditions which included reducing subsidies and increasing taxes.
The government has held out against tax rises and subsidy slashing demanded by the IMF, fearful of backlash ahead of.
However, with Pakistan sinking deeper into a severe economic crisis, the government has been forced to implement some of the measures recommended by the IMF, such as slashing subsidies on fuel and letting market forces determine the value of the Pakistani rupee.
These measures, which were implemented earlier this week, resulted in fuel prices rising to a historic high and the Pakistani rupee sliding to its lowest ever level against the dollar.
The Pakistan economy has been hit by a balance of payments crisis as it struggles to service high levels of external debt and deal with a massive crunch in foreign exchange reserves.
The state bank of Pakistan has said that foreign exchange reserves had dropped again to $3.1 billion dollars, which will sustain less than three weeks of imports. Of this amount, around $3 billion has been deposited by Saudi Arabia but is not meant to be used.
As a result, thousands of containers with essential items such as food and medicines have been left stranded at the Karachi port as the Pakistan government is unable to make the required payments.
This impasse at the Karachi port continues even as the prices of food, medicines, fuel and gas rise to levels beyond the reach of a large section of the population. Year-on-year inflation in Pakistan has risen to its highest level in 48 years.
These problems have been compounded by domestic political chaos and a deteriorating security situation.
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