Political unrest in Pakistan is likely one of the reasons the International Monetary Fund (IMF) is hesitant to revisit the stalled bailout package, said Bloomberg in a note on Friday.
“Capital is fleeing Pakistan because there is a growing risk that the IMF will not deliver a bailout, which is required for the country to avoid default in the fiscal year beginning in July,” said Bloomberg Economics’ Ankur Shukla and Abhishek Gupta in the note.
“Political unrest is probably one of the reasons the IMF is balking,” they noted.
“The country’s leadership has been unstable since Khan was ousted as prime minister in a no-confidence vote in April 2022. Khan’s arrest this month (he was released after one day) has escalated the face-off between him and the government, as well as the army,” the note added.
It further said, “The country’s leadership has been unstable since Khan was ousted as prime minister in a no-confidence vote in April 2022. Khan’s arrest this month (he was released after one day) has escalated the face-off between him and the government, as well as the army”.
The note mentioned the rupee’s freefall in the past few weeks, briefly highlighting that the currency fell to a record low of 299 per dollar following Imran Khan’s arrest last week, but has since clawed back some gains and settled back at 285.
The currency will likely fall further if the former prime minister and the government continue to clash and/or if the IMF chooses to hold off releasing the bailout, it added.
This comes as Pakistan and the IMF continue to negotiate the restart of the multibillion-dollar program, which has been stalled since November 2022. IMF and Pakistan held talks between January 31 and February 9 under the ninth review of the authorities’ program under its Extended Fund Facility (EFF) arrangement. However, despite the passage of over three months, a staff-level agreement is yet to be signed.
Signs are glaring. Start stockpiling food and essential items. Stockpile for atleast a year. Stockpile dry fruits and don’t take perishable food items for stockpiling. Get arms to suitably defend what’s yours. Protect women and children as they are likely to be taken as bargain chips. Worst is in sight. May Allah protect the well prepared.