Pakistan Will Have to Go to IMF for a Loan Despite Bond Float Efforts

Pakistan has already taken more than $25 billion in loans from different sectors. Things don’t seem good for the national economy as Pakistan will again look up to International Monetary Fund (IMF) to balance the crisis.

Analysts say the current interest returns on bonds issued by the government will not be enough to ensure a stable economy. As a result it is projected that caretaker government will have to look towards IMF for its rescue.

There were some positives to look at during the start of 2017. KSE-100 index hit an all-time high of 53,000 points. However, to the surprise of many, economy was hit hard after mid-year. Towards the end, 100-index touched lowest of the year, closing at 40,500 on 29th December 2017. Rupee’s value also fell against dollar as trade deficit continued to increase.

Read More: IMF Says Pakistan’s Financial Outlook is Bleak

Things to Look For in 2018

What worries Pakistan most is how the country will pay back the amount it owes to IMF and other lenders. In past Pakistan took loans to pay back loans, it seems that the same path will be followed this year too.

Government issued bonds on a good return rate. However, this isn’t enough to cover import bills and debt payments that Pakistan owes. Biggest concern for Pakistan is to somehow decrease the trade deficit which is continously increasing due to CPEC. The 10% increase in exports didn’t even make a dent in continuously increasing imports that country relies on.

In the past, Pakistan went to IMF and took loans and ensured repayments by devaluing rupee and ensuring privatization of state-owned companies. Pakistan also violated some of the commitments with IMF on previous loans, which will most probably result in increased sanctions by IMF this time around.

2018 is already here, let’s see if Pakistan economy can finally improve after years of dependence on foreign loans.

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