Is Pakistan’s $7bn IMF bailout package in trouble?

Islamabad, Pakistan – When Pakistan reached yet another staff-level agreement (SLA) with the International Monetary Fund (IMF) in July for a $7bn, three-year loan programme, it was hailed as a lifeline for both the government, which had assumed office only months before, and the country itself, which was reeling under a severe economic crisis.

However, two months later, Pakistan is still waiting for the United States-based global lender’s approval of the programme, Pakistan’s 25th since the first such bailout deal was signed in 1958.

The IMF executive board, responsible for ratifying SLAs and releasing funds, is yet to include Pakistan’s case on its agenda. The delay has fuelled speculation about whether the debt-hit country has failed to meet the IMF’s bailout conditions.

Earlier this week, Pakistan’s Deputy Prime Minister Ishaq Dar accused the IMF of “deliberately delaying” the release of funds.

“In the past two and a half years, efforts have been made to sabotage Pakistan’s critical negotiations with the IMF. There was geopolitics at play when Pakistan was close to default,” Dar said while attending an official event in London on September 8.

“Why shouldn’t I raise a finger when our technical review is complete? Why are they wasting our time?” he said.

Pakistan’s economic meltdown was worsened by political instability – and both tragedies hit the cash-starved nation of 241 million people at almost the same time.

In 2019, the then-Prime Minister Imran Khan secured a three-year IMF programme, but violated its conditions by drastically reducing fuel prices in early 2022, shortly before his government was deposed through a parliamentary vote.

The succeeding coalition government, headed by current Prime Minister Shehbaz Sharif, resumed the programme in August 2022. Dar was appointed the finance minister the next month.