IMF loan uncertainty very high

Moody’s Investors Service has given a “credit negative” signal to Pakistan in the face of prolonged political ambiguity and social tensions over election results, which will make it tough to approach the IMF for a new programme, weaken external economy and make liquidity management more challenging. In its report titled “Political uncertainty persists in Pakistan following inconclusive election results, a credit negative”, the global credit rating agency said “overall, uncertainty around Pakistan’s ability to quickly negotiate a new IMF programme after the current one expires in April 2024 remains very high. Pakistan’s government liquidity and external vulnerability risks will remain very high until there is clarity on a credible longer-term financing plan.” It said Pakistan’s foreign exchange reserves remained “very low” at $8 billion as of February 2, 2024, sufficient to cover only about six weeks of imports and well below what was required to meet external financing needs for the next three to four years.