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Heightened political uncertainty in Pakistan is “probably one of the reasons” the International Monetary Fund (IMF) is hesitant to revive the stalled bailout package, stated Bloomberg in a note on Friday.

Ankur Shukla and Abhishek Gupta, at Bloomberg Economics, said “capital is fleeing Pakistan because there is a growing risk that the IMF will not deliver a bailout, which is needed for the country to avoid default in the fiscal year starting from July”.

The remarks come as Pakistan and the IMF remain in talks for the resumption of the multi-billion dollar programme, which has been stalled since November last year.

“Political unrest is probably one of the reasons the IMF is baulking,” the note said.

“The country’s leadership has been unstable since Khan was ousted as prime minister in a no-confidence vote in April 2022. Khan’s arrest this month (he was released after one day) has escalated the face-off between him and the government, as well as the army,” the note added.

The report highlighted that the rupee plunged to a record low of 299 per dollar after Khan’s arrest last week, but has since clawed back some gains and settled back at 285 after his release.

“The currency will likely fall further if Khan and the government continue to clash and/or if the IMF chooses not to provide loans,” it added.

Pakistan saw a fresh wave of violence last week in the aftermath of Imran Khan’s arrest with protesters ransacking state and private property, prompting the government to deploy army troops in two provinces as well as the federal capital.

At least nine people died in the unrest, police and hospitals have said, while hundreds of police officers were injured.

The government made several arrests, which targeted top leadership of Khan’s party – the Pakistan Tehreek-e-Insaf (PTI) – as well as his supporters with reports suggesting more than 4,000 people have been detained.

Khan, freed on bail later, condemned the violence that ensued, but called for protests as he pushed ahead on his call for elections. Talks on holding polls failed earlier.

At the same time, the country’s economy has continued to bear the burden of mounting debt and falling foreign exchange reserves. Talks of default gathered steam again before Finance Minister Ishaq Dar moved to pacify markets.

The worsening economic situation has also kept the currency market under pressure for months.

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Tulukan Mairandi May 19, 2023 03:12pm
Nobody will lend a paddle to a sinking ship. It will sink anyway. Likewise IMF will never release the tranche to Pakistan. A default can no longer be avoided.
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Truthisbitter813 May 19, 2023 05:15pm
It is not political unrest, it geopolitical strong-arming. Pakistan is strengthening its ties with Russia, Iran and China. That is why IMF (being a lackey of the US) is trying to torpedo Pakistan's chances at recovery so that rivals of the US do not gain a regional ally (trade or otherwise).
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Jani Walker May 19, 2023 06:22pm
"Dar". He has showed IMF the eyes. He knows how to deal with IMF. Staff at IMF tremble when they see him. He don't care about IMF, after all who are they to tell him to stop lying.
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Pakistani1 May 19, 2023 08:55pm
Are you sure Mr. Bloomberg?
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Ali May 20, 2023 01:55am
@Tulukan Mairandi, And PTi too
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Hilarious May 20, 2023 07:09pm
@Ali, the country is sinking and you’re worried about a political party.
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Hilarious May 20, 2023 07:10pm
It’s not geopolitical strong arming, it’s years worth of mis management and corruption catching up, and this was inevitable.
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