IMF and Pakistan have long been in a love-hate relationship. The general public hates the results of IMF’s conditions but loves the benefits after implementation of the loans. Even the littlest child of Pakistan is well aware of the hike in petrol prices and it is no news that the reason is IMF. The government is willing to bend down to any and all of IMF’s conditions in order to receive the bailout package.
Pakistan’s government has been unable to secure funding from the global bond market and commercial banks which make it even more important to secure an agreement with the International Monetary Fund. The government is trying to reach a benchmark agreement which would result in a $6 billion bailout.
As per IMF’s conditions for the bailout, petroleum and oil prices were raised by RS 30/- per litre. Pakistan’s dollar bonds reached a record low this month after the government raised fuel prices. This was a key condition by IMF in order to resume the bailout programme. Subsidies on electricity and fuel are also to be reversed as per the IMF conditions to meet the agreement.
The successful resumption of the program will unlock the remaining $3 billion from the loan program. Pakistan has also requested the IMF to extend its loan program for a year and increase the loan size by a further $2 billion. The loan will secure several financial needsof the public as per the government.