The International Monetary Fund (IMF) has imposed 11 new conditions on Pakistan for the release of the next tranche of funds to the country.
The multilateral body also cautioned Islamabad that tensions with India, if sustained or raised, could heighten risks to its fiscal, external and reform goals under the bailout programme.
“Reputational risks could also come... if there was a perceived misuse of fund disbursements,” according to an IMF staff-level report dated May 18.
The IMF board, which met in Washington DC on May 9, approved lending of $1 billion to Pakistan under an existing multi-year programme involving a total support of $7 billion. It also cleared a $1.4 billion credit line for climate resilience efforts, which will be released in tranches.
India abstained from voting at the board meeting, raising concerns over the efficacy of such bailouts and flagging the “possibility of misuse of funds by Pakistan for state-sponsored cross-border terrorism.”
There is no provision to vote against a proposal at the IMF. A country can either vote in favour or abstain.
India also pointed out to the IMF that Pakistan has had disbursements from it in 28 of the 35 years since 1989. In the last five years, there have been four IMF programmes to support it.
If the previous programmes had succeeded in putting in place a sound macroeconomic policy environment, India stressed, Pakistan would not have approached the fund for yet another bailout programme. New Delhi has also underscored the “oversized” role of the Pakistani army in the economic affairs there.
The new conditions imposed by the IMF on Pakistan, the latest report showed, include the parliamentary approval of a tight $62.3 billion (PKR 17.6 trillion) budget, a hike in the debt servicing surcharge on electricity bills and lifting curbs on imports of used cars older than three years. The move would reportedly raise the number of conditions to 50.
The report said tension between Pakistan and India has risen significantly since the April 22 attacks (in Pahalgam) but the market reaction in Pakistan so far “has been modest with the stock market retaining most of its recent gains and spreads widening moderately.”
India launched Operation Sindoor against terror infrastructure in Pakistan early on May 7 to retaliate against the terror attack that killed 26 people. On May 10, both the countries reached an agreement to halt operations against each other.
The multilateral body also cautioned Islamabad that tensions with India, if sustained or raised, could heighten risks to its fiscal, external and reform goals under the bailout programme.
“Reputational risks could also come... if there was a perceived misuse of fund disbursements,” according to an IMF staff-level report dated May 18.
The IMF board, which met in Washington DC on May 9, approved lending of $1 billion to Pakistan under an existing multi-year programme involving a total support of $7 billion. It also cleared a $1.4 billion credit line for climate resilience efforts, which will be released in tranches.
India abstained from voting at the board meeting, raising concerns over the efficacy of such bailouts and flagging the “possibility of misuse of funds by Pakistan for state-sponsored cross-border terrorism.”
There is no provision to vote against a proposal at the IMF. A country can either vote in favour or abstain.
India also pointed out to the IMF that Pakistan has had disbursements from it in 28 of the 35 years since 1989. In the last five years, there have been four IMF programmes to support it.
If the previous programmes had succeeded in putting in place a sound macroeconomic policy environment, India stressed, Pakistan would not have approached the fund for yet another bailout programme. New Delhi has also underscored the “oversized” role of the Pakistani army in the economic affairs there.
The new conditions imposed by the IMF on Pakistan, the latest report showed, include the parliamentary approval of a tight $62.3 billion (PKR 17.6 trillion) budget, a hike in the debt servicing surcharge on electricity bills and lifting curbs on imports of used cars older than three years. The move would reportedly raise the number of conditions to 50.
The report said tension between Pakistan and India has risen significantly since the April 22 attacks (in Pahalgam) but the market reaction in Pakistan so far “has been modest with the stock market retaining most of its recent gains and spreads widening moderately.”
India launched Operation Sindoor against terror infrastructure in Pakistan early on May 7 to retaliate against the terror attack that killed 26 people. On May 10, both the countries reached an agreement to halt operations against each other.
