The United States said on Wednesday that Pakistan’s incoming government “must immediately prioritize” the country’s economic situation, and continue its engagement with the International Monetary Fund (IMF) and other international financial institutions.
Pakistan’s new coalition government formed primarily by Pakistan Muslim League-Nawaz Party and Pakistan People’s Party (PPP) took oath today (Thursday) during the inaugural session of the 16th National Assembly.
“I’ll just say with respect to the IMF that we support Pakistan’s efforts to break free from the vicious cycle of debt and international financing,” US State Department Spokesperson Matthew Miller said in a press briefing.
“The long-term health of Pakistan’s government – or economy is crucial to its stability,” he said.
“Pakistan’s new government must immediately prioritize the economic situation because the policies over the next several months will be crucial to maintaining economic stability for Pakistanis. And we urge Pakistan to continue working with the IMF and other international financial institutions towards macroeconomic reforms,” he added.
Miller’s remarks come in response to a query regarding former prime minister Imran Khan’s letter to the IMF, in which the Pakistan Tehreek-e-Insaf (PTI) founder has urged the international lender to factor in countries’ political instability in any further bailout talks.
The PTI had sent the letter to the IMF detailing its position, two senior sources in the party reportedly told Reuters, adding more details would be made public in due course.
Pakistan averted a last-minute default last summer owing to a short term IMF bailout, but the programme expires next month and a new government will have to negotiate a long-term arrangement to keep the $350-billion economy stable.
Days ago, Bloomberg News, citing a Pakistani official, reported that Pakistan plans to seek a new loan of at least $6 billion from the International Monetary Fund to help the incoming government repay billions in debt due this year.
The country will seek to negotiate an Extended Fund Facility with the IMF, the report said, adding that the talks with the global lender were expected to start in March or April.
Earlier, Moody’s Investors Service warned that it remains highly uncertain whether the newly elected government of Pakistan be able “to quickly negotiate a new International Monetary Fund (IMF) program” soon after the ongoing programme expires in April.
It said that Pakistan’s political risks remain high, “following a highly controversial general elections held on 8 February 2024”.
“The forthcoming coalition government’s electoral mandate may not be sufficiently strong to pursue difficult reforms that will likely be required by a successor program. Until a new program is agreed to, Pakistan’s ability to secure loans from other bilateral and multilateral partners will be severely constrained,” it said.