Pakistani officials are going to Washington this Monday, April 15, to negotiate a new aid plan for their country with the International Monetary Fund. New austerity measures are expected, warns the Pakistani government.
1 min
While last tranche of aid has not yet been paid, Islamabad finds itself obliged to negotiate a new bailout plan with the IMF. L’Pakistani state has suffered for almost two years from a deterioration in its current account balance. Too much spending and not enough revenue, to which must be added a very high external debt (around 80% of GDP) and inflation above 20%.
The end of very popular subsidies
The IMF projects Pakistan’s GDP to grow by 2% this year, but that’s not enough. To redress the situation, the government plans to end very popular subsidies on fuel and electricity which help the population to absorb the cost of living.
New austerity measures are expected. “ We must rebuild the foundations of our economy, revive it and get rid of the debt”, declared the Prime Minister last March. To set an example, Shehbaz Sharif also announced that he and the main ministers would forgo any salary or benefits “ with a view to promoting austerity at the government level “.
Without economic reforms, the World Bank warns, growth will continue to be sluggish and Pakistan will inevitably face liquidity problems.
Read alsoPakistan: protests against inflation and electricity hikes