CORPORATE WINDOW: Averting disruption

Despite divergent views and apparent distrust, as evident from public pronouncements during stretched negotiations on the resumption of the International Monetary Fund (IMF) programme, both Pakistan and the IMF staff remain engaged. That the negotiations are not breaking down indicates that the clinching of a deal would be the best option for both sides. With the next IMF tranche of $1.2 billion, Pakistan’s risks to default in foreign debt payments could be somewhat reduced for a while. One cannot expect the IMF and the country’s trading and investment partners to assist Pakistan in living beyond its means. But they need to at least provide debt relief in a variety of ways to avoid default, without, as far as possible, increasing the country’s overall debt level. The IMF should also appreciate that, to avoid default, Pakistan’s external financing gap has been substantially bridged. The current account deficit was slashed by over 80 per cent to $2.94bn in 11 months of FY23 (owing to a lower import bill) from $15.6bn in the same period of the last fiscal year.