Pakistan's ongoing war with Afghanistan has put its next IMF funding instalment at risk, as the multilateral lender's team visits Islamabad for its third-round review, according to a South China Morning Post report. Increased military expenditure, rising inflation, and a deteriorating investment climate are making it difficult for Pakistan
International Monetray Fund. File Pic
Pakistan's raging war across the border with Afghanistan has put in danger the next instalment of the IMF funding that Islamabad so desperately needs, according to a media article.
The IMF team is currently visiting Pakistan for its third-round review of the country’s economy, ahead of the next tranche of funding. The team is looking closely at whether the economic decisions that Islamabad is taking meet the requirements that have been fixed by the multilateral lending institution to ensure that Pakistan’s economy recovers so that it is in a position to repay the loans, according to the article in the South China Morning Post.
However, the raging war with Afghanistan and the increased military expenditure make it difficult to meet the economic conditions fixed by the IMF for extending further funding to Pakistan. The investment climate in the country has been hit, and the war has also led to increased inflation. All these are factors that the IMF team will be taking into account when considering Pakistan’s eligibility for the loan.
"For any country in Pakistan’s position, IMF support comes with certain non-negotiables: stay on track with reform commitments, implement structural changes, demonstrate financial discipline. A shooting war along a major border does not help any of those metrics, affecting precisely the numbers the IMF scrutinises most closely," the article stated.
It further points out that a stall in the IMF programme could also dampen investor sentiment, which had strengthened significantly over the past year.
According to the article, the war with Afghanistan also endangers China’s investment in Pakistan.
"The China-Pakistan Economic Corridor – a sprawling US$65 billion infrastructure network – represents one of Beijing’s most ambitious undertakings under its Belt and Road Initiative, threading through some of Pakistan’s most exposed terrain. Every escalation along the western frontier puts that infrastructure at risk," the article said.
Meanwhile, the US-Israel war on Iran has disrupted oil and gas supplies across Asia, sending energy costs and transport prices soaring. This is bound to increase the inflation rate in Pakistan and weaken its fragile economy even further, the article added.
This story has been sourced from a third party syndicated feed, agencies. Mid-day accepts no responsibility or liability for its dependability, trustworthiness, reliability and data of the text. Mid-day management/mid-day.com reserves the sole right to alter, delete or remove (without notice) the content in its absolute discretion for any reason whatsoever.
Subscribe today by clicking the link and stay updated with the latest news!" Click here!
