Karachi: International Monetary Fund (IMF) could release funding to Pakistan by June under bailout package, Bloomberg report stated, but warned country could be heading towards default if this does not happen.

“Our base case is that IMF will deliver remaining $ 2.6 billion in aid under current bailout programme by June helping Pakistan wiggle through immediate crisis as country has fulfilled most of IMF’s conditions,” wrote Bloomberg economists Ankur Shukla and Abhishek Gupta. “If aid does not arrive, though, we think China will help plug gap to head off default,” they added.

Economists, however warned “Pakistan is careening toward potential default as soon as June unless it secures aid from IMF” and noted that South Asian nation would require another IMF programme to avoid default in next fiscal year.

“Country will probably need to seek another IMF bailout programme or more external aid from allies to avoid default next fiscal year. If assistance fails to materialise, we think China will step up again,” wrote economists.

Pakistan remains in talks with international lender for resumption of IMF’s Extended Fund Facility which has been stalled since last year. Bloomberg economists said Pakistan announcing default would not bode well for China, key strategic partner of South Asian nation.

“If it defaults, China would have much to lose far beyond financial hit. Broader strategic considerations might tip odds toward China playing constructive role in helping Pakistan weather crisis.”

“A stable Pakistan is in China’s interest, in our view. Any turmoil in economy and associated social unrest that could result from default would threaten that stability,” wrote economists.

Published in The Daily National Courier, March, 22 2023

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