Pakistan’s Khan slams IMF, then seeks bailout. Why the change?
The new prime minister may have preferred to seek financing from China and the Gulf but reality has dawned that even those handouts would come with strings attached
Prime Minister Imran Khan’s ambition of creating a “New Pakistan” has suffered a series of economic setbacks, forcing his administration to apply to the International Monetary Fund (IMF) for an emergency bailout of more than US$8 billion, the largest in the country’s history of indebtedness.
When talks begin in the coming weeks, the country will have to make political compromises, as with its past dealings with the IMF, according to analysts.
Dr Adeel Malik, a development macroeconomist at Oxford University, said Pakistan was aware “an IMF programme would be readily available as long as they have given a geopolitical concession behind the scenes”.
“Then the IMF can step in and do all the necessary accounting exercises and push for the traditional buttons – exchange-rate devaluation, expenditure cutting and the like. The IMF programmes do not solve the political incentive problem, but just exacerbate it,” Malik said.