Political turbulence caused by former Pakistani prime minister Imran Khan’s feuds with the country’s two largest parties – Pakistan Muslim League-Nawaz (PML-N) and Pakistan People’s Party (PPP) – in an economically fragile nation is finally affecting its diplomatic relations.
Monday, Prime Minister Shehbaz Sharif issued a curt statement through his office’s media wing stating that Khan’s antics had impeded Pakistan’s efforts to obtain a loan from the International Monetary Fund (IMF). His Finance Minister, Ishaq Dar, has also repeatedly criticized Khan’s incompetence for the country’s catastrophic economic predicament and implied that the IMF is holding back on the rescue money due to political upheaval in recent days.
That goes beyond Imran Khan. On the political horizon are also provincial elections in Khyber Pakhtunkhwa and Punjab, both of which have lately experienced an increase in violence. These will be followed by general elections at the end of the year, making it extremely difficult for the IMF to determine whether or not to provide a loan under such uncertain conditions.
According to Pakistani media, the IMF deal with Pakistan, which has been on the edge of materialization for several days, will not materialize due to political uncertainty. According to reports, the IMF seeks assurance from the government that any future dispensation will adhere to the current arrangement for a $7 billion fund.
With open animosity between political parties, it is doubtful that the IMF would receive assurances from diverse politicians, including Khan’s Pakistan Tehreek-e-Insaf (PTI), that they will adhere to IMF criteria.
Another potential cause of the delay in the IMF loan is the international lender’s need that Pakistan’s bilateral lenders give commitments to restructure its existing debts. On the restructuring of Pakistan’s debt, China, the country’s primary lender and steadfast economic partner, remained noncommittal. Beijing exhibits the same apathy for Pakistan as it does toward Sri Lanka, its other vital ally in South Asia. Although having signed a staff-level agreement with the IMF in September 2022, the island country in the Indian Ocean is still awaiting the IMF loan, since Beijing has not assisted Colombo in restructuring its bilateral debt.
Due to the escalating violence in Pakistan’s border regions with Afghanistan, the rise of nationalism in Balochistan and Sindh, and Pakistan’s politics of attrition, Pakistan’s allies with large wallets in the Gulf are hesitant to provide more help. Over the course of a number of months, friendly nations have shown interest in investing in Pakistan, but have refrained from offering cheap cash.
The Gulf states, particularly Saudi Arabia and Qatar, have taken note of the strong nationalist movement in Balochistan, where Baloch fighters have trapped Pakistan’s security forces in an ongoing struggle. As attacks on Chinese nationals working to implement Chinese President Xi Jinping’s grand $64 billion vision for the China Pakistan Economic Corridor through the China Pakistan Economic Corridor have increased, the nationalist movement in Balochistan has ensured that Islamabad’s relations with Beijing have plummeted (CPEC).
The CPEC is a massive economic and political disaster for both Pakistan and China, since both countries face economic losses and unmet ambitions.
The United States is the other friendly nation that the ruling administration has reached out to. During his International Women’s Day visit to New York, Foreign Minister Bilawal Bhutto reportedly requested Washington’s assistance in persuading the IMF to provide an early loan. Reportedly, the finance ministry in Islamabad has reached out to American authorities in an effort to ease the impasse with the IMF.
Donald Blome, the American ambassador to Pakistan, just just reassured Islamabad that the United States is eager to assist Pakistan in obtaining the IMF loan.
The IMF appears to be waiting and playing it safe with a country that has accepted at least 22 IMF loans and is anxiously expecting its 23rd in the midst of political upheaval, poor governance, escalating violence, and economic uncertainty.