New Delhi: With the peak of Pakistan’s economic weakness, the International Monetary Fund (IMF) has indicated to tighten its stance. It has imposed 11 new policy conditions to unlock Islamabad its next bailout installment. In this way the total number of conditions has increased to 50. This latest decision reflects the increasing discomfort of the global lender, not only in view of Pakistan’s economic mismanagement but also in view of India’s tension.
Beyond fiscal and structural reforms, Pakistan’s geopolitical behavior is now on the radar. The warning is clear: If tension with India continues or deteriorates, Pakistan’s already weak fiscal program may completely collapse.
In response to the terrorist attack in Pahalgam on 22 April, the accurate airstrikes by India under ‘Operation Sindoor’ on 7 May shook not only Islamabad but also international observers. Pakistan’s efforts to retaliate through drones and missiles worsened the situation. And while the ceasefire was announced on May 10, the IMF is not sure that peace will remain for a long time.
According to the report, the decision of the IMF is directly related to Pakistan’s struggle situation, which will put budget execution, foreign exchange reserves and improvement deadline at risk. Remandable, the IMF has marked Pakistan’s growing defense expenditure as a major weakness, which is estimated to exceed Rs 2.5 trillion by 2025–26. This is an increase of 18% due to military tension, while the country is struggling to provide electricity and prevent inflation.
According to the report, behind the curtain, the IMF employees were concerned with the government’s plan to withdraw money in defense after a dispute with India. They consider it to be Pakistan’s economic indiscipline. He says that this is about the options being made by Pakistan at the time of crisis.
Following are the new reforms implemented by the IMF – Parliament must pass the federal budget of the upcoming 17.6 trillion rupees strictly following the standards of the IMF; Its provinces will have to implement agricultural income tax, which the brokers of feudal power have been avoiding for a long time; And long -awaited governance roadmap should eventually be published.
The electric field known as a long black hole due to subsidies and disabilities has also been facing a tough investigation. The tariff will be re -determined on an annual basis, the gas prices will be adjusted every two years and the legal structure around captive power and surcharge will be tightened. The limit of Rs 3.21 per unit will be removed on the power loan service – a step that is likely to increase the bills of families already struggling.
But perhaps the most symbolic example of the micro management of the IMF is its instructions on the cars used: Pakistan will have to relax the importing restrictions, and will have to be increased from three years to five years by July 2025. This is a small step, which will have a major impact on the middle class consumers and import-be-baron auto sector.
This crisis is real for Prime Minister Shahbaz Sharif. The falling reserves, the suspicion of investors and now the increasing external conditions related to regional behavior are in trouble. Any wrong step – whether it is military or economic -international lenders, Pakistan may have to pay a heavy price.
As the global attention is getting focused on the next step of Pakistan, it is becoming difficult to ignore a truth-the country’s economy is no longer a matter of balance sheet and budget, it has now become a means of geopolitical bargaining. And the IMF is taking decisions.
