PTI's letter to IMF likely to create problems for Pakistan

Islamabad: The letter of Pakistan Tehreek-e-Insaf (PTI) to the International Monetary Fund (IMF) is likely to create problems for Pakistan and the IMF has demanded more clarifications regarding the restructuring of Pakistan International Airlines (PIA) and the rescheduling of its Rs268 billion debt.

According to details, the PTI's decision, which will demand the end of support to Pakistan due to ‘rigged elections’, will take a far-reaching toll on the cash-strapped economy in the wake of dwindling foreign exchange reserves. Juices may have side effects.

On the other hand, the IMF has sought further clarification from the Government of Pakistan on the proposed restructuring plan of PIA and its unbundling to ascertain how the rescheduling of Rs268 billion domestic debt would have fiscal implications. And how will the government deal with them without increasing the fiscal deficit.

This important statement by PTI has come at a time when the incoming government, which is likely to be sworn in in the first week of March 2024, has the task of meeting the existing $3 billion Standby Arrangement (SBA) program and then there will be no choice but to sign a new 36-month bailout package with a request for quota increases considering the large size of the dollar gap.

Immediately after assuming the reins of power, the incoming government will have to send a formal request to the IMF to send its review team to Islamabad to complete the second review, which should be completed by March 15, 2024, so that the $1.1 billion will be released by April 12, 2024. Approval may be sought from the Board for release of the final installment.