IMF loan programme expiring June 30, Pakistan’s living off on debt began with Nizam’s loan
Photo credit Twitter @Vonderleyen
By Manish Anand
New Delhi, June 28: Pakistan is hopeful that after the passage of the Budget on the dotted lines dictated by the International Monetary Fund (IMF) the national default on servicing foreign debts will be averted. The IMF loan programme is expiring on June 30 even while the officials of the multilateral institution said that they are in advanced stage to clear way for another bailout package.
The mission chief of the IMF for Pakistan, Nathan Porter, said in a statement that the Pakistani authorities have taken decisive measures to bring policies more in line with the economic reform programme. Such measures include broadening the tax base and higher social and development spending. Also, the IMF has noted the steps taken to improve the functioning of the foreign exchange market. Pakistan has also taken a few measures to tighten monetary policy to reduce inflation.
If the IMF agrees to extend another bailout package it will the 23rd occasion for the Islamic nation to have sought the help of the multilateral institution with SOS. In the last 75 years, Pakistan on an average has gone every three years to the IMF for bailout package.
Within months Pakistan faced the economic crisis and the Islamic nation was without fund to pass its Budget in 1948. “The budgetary deficit during the period from August 1947 to March 1948 reached INR 234 million… In early 1948, the Nizam of Hyderabad extended a loan of INR 200 million to Pakistan. This to a large extent enabled the Central government to finalize its annual budget, whose defence component accounted for 70 per cent,” wrote Ravinder Kumar Kaushik in an essay “Pakistan: Treading a difficult journey” for the latest journal of Gyan Chakra’s India’s Military Strategy.
Kaushik further stated that Pakistan’s external debt stands at $141 billion and internal debt is 63 trillion Pakistani rupee, while the GDP growth is minus five per cent. China accounts for over 25 per cent of the external debt of Pakistan. Beijing roped in Islamabad for $65 billion China-Pakistan Economic Corridor, which the experts claim to have become an albatross around the neck of the highly indebted country.
“Gwadar Port is rusting, and suicide bombers are taking aims to buses filled with Chinses workers. Loans are more defaulted than paid,” added Kaushik.
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