Pakistan’s tilt towards China, Iran seen as most likely reason for delaying IMF bailout

The cash-strapped country of more than 220 million people has a history of violating the terms and conditions imposed by lenders

Islamabad: Pakistan is in deep economic trouble and the only available lifeline, reviving the International Monetary Fund’s $6.5 billion bailout, has become all but impossible, according to media reports, likely because of U.S. concerns about the country’s threats to China and Iran. Lean said.

The cash-strapped country of more than 220 million people has a history of violating the terms and conditions imposed by the lender of last resort, but authorities have somehow managed to convince the fund in the past, Geo News reported.

This time, however, the coalition government led by the Pakistan Democratic Movement (PDM) faces difficulties as the Washington-based bank has shown no leniency.

Pakistan entered a 39-month, $6 billion IMF program in 2019, which was extended until June 2023, with the combined seventh and eighth tranches approved by the board last August An additional $1 billion was added.

According to Geo News, a review of the past shows that most of Pakistan’s previous bailouts since the late 1980s13 were not completed, so the economy never fully recovered.

While the government continues to claim it has met all the IMF’s conditions, analysts and economists are trying to weigh the reasons behind the board’s reluctance to complete the ninth review, which has stalled since November.

Some say the whole Ninth Review fiasco has a political angle, while others are now blaming Pakistan’s pivot to China and Iran as the main reason, Geo News reported.

While Pakistani Foreign Minister Bilawal Bhutto-Zardari has denied any such claims, saying the Pakistan-Pakistan relationship “has nothing to do with the IMF”, financial experts believe this will further complicate relations between the two countries.

“By the way, China has been very aggressive and has helped us a lot in recent weeks by rolling over a lot of debt. This has obviously put Pakistan in a better financial position, which is part of what the IMF wants. China at this point Not a problem at all,” said former finance minister Dr Hafez Pasha, Geographical News reports.

Up to 30 percent of Islamabad’s total debt is owed to Beijing, while the long-stalled China-Pakistan Economic Corridor (CPEC) has exacerbated Pakistan’s fiscal woes with skewed loan deals. According to Geo News, the country owes more to China than the IMF and World Bank.

However, Dr Pasha said relations with Iran were a problem (for the US).

“Now it’s a new relationship. Things have changed in that regard with Saudi Arabia and Iran signing the deal to normalize relations. So that improves the situation in the Middle East and Pakistan has to fulfill some of its past obligations at this point.” Commitments, such as the boundaries that Iran has delineated but has not yet set. So there is a possibility that the United States, as a prominent member (IMF) may dispute this,” he said, adding that until now, he thought it was It will not affect the Ninth Review.