The International Monetary Fund (IMF) is likely to demand Pakistan to take revenue-raising measures among prior actions before it releases the next tranche of financial aid to the crisis-hit country, Moody’s Investors Service said.
According to Moody’s, Pakistan’s external position was under significant stress. “The government’s liquidity and external vulnerability risks are elevated, and there remains considerable risks around Pakistan’s ability to secure required financing to fully meet its needs for the next few years,” read a statement released by the credit-rating company.
Moody’s said the IMF, in its statement, noted that there was considerable progress during the visit on policy measures to address domestic and external imbalances, but “there is no certainty yet on whether and, if so when, the IMF financing will be forthcoming”.
“The financing from IMF, which is likely to also catalyse funding from other multilateral and bilateral partners, is crucial to alleviate Pakistan’s liquidity stresses,” Moody’s said.
The company further said Pakistan’s external position was “under significant stress following delay in securing official sector financing”, which have driven a continued decline in its foreign exchange reserves.
The country’s economy is in dire straits, stricken by a balance-of-payments crisis as it attempts to service high levels of external debt amid political chaos and deteriorating security.
The IMF’s ninth review for Pakistan remained inconclusive even as the government was hopeful that the global funding agency will release a much-needed $1.1-billion tranche from a $7-billion bailout package.
The standoff and deadlock came after Pakistani officials declined the condition of a 10 to 20 percent cut in its defence budget, as committed in earlier talks. The financial relief is already delayed as Pakistan earlier failed to meet conditions set by the IMF for funds to be released.
The IMF’s technical team was in Pakistan for over 10 days to negotiate terms and assess the economic condition of the country. The team is reported to have left dissatisfied as Pakistani officials dragged their feet on the proposal to cut its defence spending. The country spends about 4 percent of its GDP on defence, and a 10 percent cut may give the ailing economy a breather.
Read all the Latest News here
Comments
0 comment