ISLAMABAD: The ongoing political unrest in Pakistan appears to be one of the core reasons the International Monetary Fund (IMF) is hesitant to revive the stalled bailout package, Bloomberg stated in a note on Friday.
“Capital is fleeing Pakistan because there is a growing risk that the IMF will not deliver a bailout, which is needed for the country to avoid default in the fiscal year starting from July,” Ankur Shukla and Abhishek Gupta, at Bloomberg Economics, said.
The remarks come as Pakistan and the IMF remain in talks for the resumption of the multi-billion dollar programme, which has been stalled since November last year.
“Political unrest is probably one of the reasons the IMF is baulking,” the note said.
“The country’s leadership has been unstable since Imran Khan was ousted as prime minister in a no-confidence vote in April 2022. Khan’s arrest this month (he was released after one day) has escalated the face-off between him and the government, as well as the army,” the note added.
The Bloomberg note highlighted that the rupee plunged to a record low of 299 per dollar after Khan’s arrest last week, but has since clawed back some gains and settled back at 285 after his release.
“The currency will likely fall further if Khan and the government continue to clash and/or if the IMF chooses not to provide loans,” it added.
Pakistan witnessed a fresh wave of violence last week in the aftermath of Imran Khan’s arrest with protesters ransacking state and private property, prompting the government to deploy army troops in two provinces as well as the federal capital.
At least nine people died in the unrest, police and hospitals have said, while hundreds of police officers were injured.
The government made several arrests, which targeted top leadership of Khan’s PTI as well as his supporters with reports suggesting more than 4,000 people have been detained.
The former prime minister, who secured post-arrest bail, condemned the violence that ensued, but called for protests as he pushed ahead on his call for elections.
Talks between the PDM government and the PTI on holding elections failed earlier.
