While it is highly unlikely that funds from the International Monetary Fund (IMF) will help Pakistan get its economy back on track, inflation could altogether average 33 percent in the remainder of the financial year 2022-23.
Senior economist Katrina Ell of Moody’s Analytics told Reuters on Wednesday, “Our view is that an IMF bailout alone isn’t going to be enough to get the economy back on track. What the economy really needs is persistent and sound economic management”.
She stated, “There’s still an inevitably tough journey ahead. We’re expecting fiscal and monetary austerity to continue well into 2024”.
Talks between the IMF and Pakistan continued this week with the latter hoping to unlock critical funding to keep it afloat. The talks are focused on reaching an agreement on a reform agenda under the country’s $6.5 billion bailout package, which initially began in 2019. A deal on the 9th Review of the program would free up more than $1.1 billion.
The financing from IMF, which is likely to also catalyze funding from other multilateral and bilateral partners, is crucial to alleviate Pakistan’s liquidity stresses, but at the same time is expected to run extra salt in the wounds of the poor in the shape of higher taxes, inflation, and power tariff hikes.
