Why is Pakistan seeking IMF bailout?

ISLAMABAD: Pakistan is approaching International Monetary Fund (IMF) not compelled by the PTI’s economic policies or performance but by those of the last government, Minister of State for Revenue, Hammad Azhar said.

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Blaming the previous regimes for the economic mess, the minster defended the extreme step of seeking IMF bailout to stabilize the economy in a series of tweets Tuesday.

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“All reforms have a time lag before they yield results. Before our reforms are put in place, we need to run the economy and for that the economy needs external financing,” he added.

Minister for Finance Asad Umar on Monday announced that the government had decided to initiate negotiations with the IMF due to difficult economic conditions.

The government inherited loans worth billions of rupees, which needed to be managed, he added.

Explaining the dilapidated situation of the national economy, Azhar said the country barely has an import cover of 1.6 months.

“Our financing requirements are 28 billion dollars for this financial year, while 8 billion dollars of debt repayment is also due this year. Deficits are soaring with SOE losses adding to it. External financing is required for rescue and recovery.”

The challenge for the PTI government to is to use the space offered by the bailout to undertake much delayed structural reforms so that we end the spiral of this debt dependency, he concluded.

The finance minister, in a video message, however said the measures will be taken to protect interests of lower income segments of the society. The government aims to put a “minimum impact” on the low-income classes, while passing on the burden to wealthy citizens, he added.