Islamabad, (Samajweekly) Eleventh-hour negotiations between Pakistan and the International Monetary Fund (IMF) have failed to unlock $1.1 billion in crucial funds aimed at preventing the cash-strapped country from going bankrupt.
A deepening economic crisis has all but emptied Pakistan’s foreign exchange reserves, leaving it barely enough dollars to cover a month of imports and it is struggling to service sky-high levels of foreign debt, the BBC reported.
The IMF team, which leaves Islamabad on Friday, said “considerable progress” had been made after 10 days of talks.
“Virtual discussions will continue in the coming days,” the head of the IMF mission Nathan Porter said in a statement.
In January, annual inflation soared to over 27 per cent — the highest in Pakistan since 1975 — and there are mounting fears for the economy in a pivotal election year.
This week, the Pakistani rupee (PKR) sank to a historic low of 275 to the dollar, down from 175 a year ago, making it more expensive for the nation to buy and pay for things, the BBC reported.
The lack of foreign currency is one of the most pressing of Pakistan’s problems.
Businesses and industries across Pakistan said they have had to slow or stop work while they also wait for goods they have imported that are currently stacking up in ports.
In late January, a government minister told the BBC that there were more than 8,000 containers piled up in Karachi’s two ports, containing goods from medicine to food.
Some of that has started to clear, according to local media reports, but much is still stuck.
Pakistan, like many countries, is suffering as a result of the coronavirus pandemic and Russia’s invasion of Ukraine, following which global fuel prices have soared.
Pakistan relies heavily on imported fossil fuels and importing food has also become more expensive.
If the PKR depreciates, fuel costs more, with knock-on effects for goods that are transported or manufactured. The government recently increased fuel prices by over 13 per cent but says it’s not planning any more, reports the BBC.
Add to this the cost of last year’s floods, which the UN says caused damage of more than $16 billion. Huge areas of Pakistan were submerged, destroying farmland and disrupting its ability to produce food.
Basics like wheat and onion have skyrocketed in price.
