Pakistan to default by Jan 10 if fails to revive IMF programme

The economic crisis has intensified in Pakistan as the country will enter default by January 10 if it fails to revive the International Monetary Fund (IMF) programme or get foreign financial aid.

Pakistan will have to make the debt repayment of $1.3 billion in the coming days which increases the cruciality of the revival of the IMF programme or foreign aid.

Yesterday, Pakistan Tehreek-e-Insaf (PTI) Chairman and former prime minister Imran Khan also warned that the country will enter default without the IMF programme. He stressed the importance of the IMF loan for the revival of the national economy, otherwise, the country will enter default.

He slammed the rulers and said they dissolved their corruption cases after coming in power. The former premier criticised the ouster of the PTI government in April last year as it was a wrong decision as the government was performing excellently on the economic front.

He reiterated that fresh elections will bring stability to the country.

Warnings from economic experts

A week ago, former finance minister Miftah Ismail also said that he fears default if Pakistan did not approach International Monetary Fund (IMF) at this crucial time, quoted Express Tribune.

He expressed these views at a two-day global conference arranged by Economics and Management Sciences Department of NED University.

He said, “We were safe for the first three years since we were in IMF programme.” After that, he added: “Imports increased rapidly in the first two years but exports could not be boosted because we had artificially stabilized the rupee.”

Quoting some key figures, Miftah said that exports reached $31 billion last year while remittances stood at $30 billion. Citing difference between income and expense to be $19 billion, he said that total income was $61 billion and expense soared to $80 billion.

The former finance minister said, “CPEC is the guarantor of economic development of the country,” adding that the companies invested in Pakistan after government gave them loans.

Speaker Shabbar Zaidi said that CPEC suffered in the “Cold War” of China and USA. He said that Pakistan needed $50 billion for energy and better infrastructure, adding: “CPEC is our need not an option for us to choose.”

College of Economics and Social Development Dean at IoBM University Professor Dr Shahid Wizarat said, “Devaluation of currency results in cheap exports and expensive imports,” adding that it also puts local industry “out of competition”.

Raising concerns over cruel conditions of IMF, he suggested that the import of luxury items should be banned to encourage local industry and control inflation.

Dar rules out default risk

However, Finance Minister Ishaq Dar once again made it clear that he can prove that Pakistan will not default and despite serious problems the country “will not approach Paris Club – a group of wealthy creditor nations.

The finance czar’s statement came during his address at a ceremony at the Pakistan Stock Exchange on December 28.

Dar said that he has always believed that Pakistan has a beautiful future and has a resilient economy. He, however, said that unfortunately the country has been put in a situation it doesn’t deserve.

The minister said it has been three months since he took charge as the finance minister and every day it is said that the country will default. “How will there be a default? There is no chance that Pakistan will default,” Dar reiterated. He admitted that the country is in a difficult spot but said that it will “survive” as things are being managed.

He said that once again a rhetoric has started that bonds will not be paid, which gave rise to speculations. “We didn’t go to Paris Club but paid the bond in time,” Dar said.

The minister said that even after the bonds were paid, the “pseudo-intellectuals kept coming”. He said that they are the same people who brought Pakistan to this point, warning Pakistanis to be conscious and not listen to them, quoted The News.

“I can prove to anyone in a discussion that Pakistan will not default but our problem is that for petty politics and objectives, we are harming the country,” Dar said.

The minister said that Pakistan’s debt-to-GDP ratio was 62% when he left the post of finance minister in 2016 and is now 72%. He said that the debt-to-GDP ratio of the United States is 110%, Japan’s is 257% and UK’s after COVID is 101%.

The finance czar urged the business community to allocate some time to Pakistan, saying they have “a big role to play” in strengthening the country’s economy.