Cash-strapped Pakistan scores IMF financial aid win – but millions of people may face ruin, analysts say
- International Monetary Fund and Pakistan have agreed to resume support package, frozen in March when previous government refused to cut fuel subsidies
- But analysts say energy price hikes now will push more people into poverty and wreak havoc among 5.2 million small and medium-sized businesses
Millions more Pakistanis could be pushed into poverty and small businesses financially ruined after Islamabad agreed to eliminate energy subsidies to secure desperately needed international funding, analysts say.
Finance Minister Miftah Ismail said a “broad agreement” struck with the International Monetary Fund (IMF) on Tuesday “locked in” Pakistan’s budget for the financial year (starting July 1) and the Fund was beginning consultations with the nation’s central bank to set monetary targets.
After that, the agreement will be submitted for approval to the IMF’s directors.
It is a key step towards the resumption of IMF support to Pakistan under a 39-month, US$6 billion balance of payments support programme initially agreed in 2019, with disbursements beginning in July of that year.
Pakistan has asked the IMF to extend its support until June 2023 and also up the value to US$8 billion, to include the country’s 2022-2023 financial year.
