POLITICAL TURMOIL IN PAKISTAN THREATENS $3 BILLION IMF BAILOUT

Pakistan has secured vital breathing space from a potential debt default with a preliminary agreement reached with the International Monetary Fund (IMF).

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However, the South Asian economy’s stability in the coming months will depend on political factors. Recent weeks have seen a volatile political situation, following a year of upheaval since the removal of former Prime Minister Imran Khan in April 2022. The country experienced widespread violence in May after Imran Khan’s arrest, as he faces numerous legal cases, including corruption and murder charges.

Uzair Aqeel, a partner at Nairang Capital in London, emphasized the significance of political stability, stating, “Everything hinges on whether political stability returns,” in response to Pakistan’s attainment of a draft agreement for a $3 billion loan program with the IMF.

Just last August, Islamabad received IMF staff approval for a $1.1 billion loan, which was subsequently suspended due to non-compliance with certain conditions. Prime Minister Shehbaz Sharif managed to negotiate a new deal after extensive phone calls and meetings with IMF Managing Director Kristalina Georgieva.