The International Monetary Fund (IMF) has raised concerns about Pakistan's ability to repay its debts, citing significant vulnerabilities in the country's economy. This assessment comes as an IMF team arrives in Pakistan to discuss a new bailout package under the Extended Fund Facility (EFF).
The IMF has identified several high-risk factors that could jeopardize Pakistan's repayment capacity. These include delays in implementing reforms, high levels of public debt, substantial financing needs, low foreign exchange reserves, and the central bank's exposure to currency derivatives.
The IMF's concerns stem from Pakistan's persistent economic challenges. The country has a long history of fiscal deficits and external imbalances. Its public debt has ballooned to over 90% of GDP, and its foreign exchange reserves have dwindled to critically low levels.
To address these issues, the IMF has recommended a comprehensive economic reform program. This includes measures to reduce the budget deficit, implement structural reforms, and strengthen the financial sector. However, the IMF has expressed doubts about Pakistan's capacity to implement these reforms effectively.
The IMF's assessment is a major setback for Pakistan, which is heavily reliant on external financing to meet its debt obligations. Without a new IMF bailout, Pakistan faces the risk of a default, which could have severe consequences for its economy and financial system.
