IMF and Pakistan

The initial discussions between Pakistan and the IMF regarding a new, larger, and longer financial programme have concluded without a formal staff-level agreement. This is primarily because the IMF requires parliamentary approval for the proposed reform measures and policy actions due to the country's unpredictable political climate. The IMF has previously noted the significant risks posed by Pakistan's political instability and social tensions, which could hinder economic stabilization efforts. Despite these concerns, the IMF has shown confidence in the current political administration, believing that the continuity of the ruling coalition after elections would ensure the persistence of the agreed reform agenda. This optimism stems from the coalition's track record of implementing committed actions under previous IMF programmes, despite the political costs involved.The IMF is expected to finalize a new loan arrangement by early July. However, for the general population, the main issue is the additional financial burden resulting from new levies, increased indirect taxes, higher taxes on salaries, and enhanced energy prices that will accompany the new loan. This indicates that the upcoming phase of economic stabilization will be particularly challenging for the majority of Pakistanis.