In an unusual move, the IMF on Tuesday urged Pakistan to resolve its political disputes in accordance with the “Constitution and the rule of law”.
The remarks by the IMF’s chief of mission in Pakistan, Nathan Porter, came after Prime Minister Shehbaz Sharif reached out to the head of the Washington-based lender to revive the long-awaited 6,500 million dollars in a last-ditch effort to avoid a possible default.
Cash-strapped Pakistan and the IMF have failed to reach a staff-level agreement on a much-needed $1.1 billion rescue package aimed at preventing the country from going into bankruptcy.
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The funds are part of a $6.5 billion bailout package the IMF approved in 2019, which analysts say is critical if Pakistan is to avoid defaulting on external debt obligations.
Prime Minister Sharif and International Monetary Fund (IMF) managing director Kristalina Georgieva met on Saturday after the government could not break the deadlock, according to The Express Tribune newspaper.
“We take note of recent political developments and, while we do not comment on domestic politics, we hope that a peaceful way will be found in accordance with the Constitution and the rule of law,” the IMF mission chief told the Pakistan, Nathan Porter. days after Sharif met Georgieva.
On May 9, violent protests broke out after paramilitary Rangers arrested former Prime Minister Imran Khan from the premises of the Islamabad High Court in connection with a corruption case.
His Pakistan Tehreek-e-Insaf (PTI) party workers vandalized a dozen military installations, including the house of the Corps Commander in Lahore, Mianwali Airbase and the ISI building in Faisalabad in response to his arrest
The mob also stormed the Army Headquarters (GHQ) in Rawalpindi for the first time.
Thousands of Khan’s supporters were arrested in the wake of the violence, which the powerful Army described as a “dark day” in the country’s history.
Prime Minister Sharif said on Tuesday that his government was not ready to talk to Khan’s party because of its violent unrest across the country on May 9.
The IMF normally refrains from commenting on another country’s political affairs.
“Maintaining sound policies and securing sufficient funding from partners remain key to Pakistan maintaining macroeconomic stability,” Porter said.
He noted that IMF staff remain engaged with Pakistani authorities to pave the way for a board meeting before the current program expires at the end of June.
Porter also explained the conditions Pakistan must meet to reach an agreement with the foreign lender.
These include the arrangement of foreign loans, the approval of a new budget in accordance with the IMF framework and the restoration of the smooth functioning of the foreign exchange market.
In February this year, IMF officials and the government of Pakistan held talks, which were inconclusive.
Pakistan, currently in the midst of an economic crisis, is struggling with high external debt, a weak local currency and dwindling foreign exchange reserves enough to support a month’s worth of imports.
Pakistan’s inflation rate rose 36.4% year-on-year in April, driven mainly by food prices.
This is the highest in South Asia, and an increase of 35.4% in March, according to the country’s statistics office.
Meanwhile, the rupee was trading at Rs 285.41 in the interbank market on Monday.
