IMF Talks: Dar Cancels Key Visit To US Amid Political Crisis

IMF Talks: Dar Cancels Key Visit To US Amid Political Crisis
Finance Minister Ishaq Dar has cancelled his crucial trip to the US, where he was also scheduled to meet the IMF team to unlock the critical $1.1 billion loan for the cash-strapped country, as per reports.

Dar cancelled his meeting owing to the intensifying political crisis as the arch-rival parties lock horns over Punjab elections.

Besides attending the spring meetings in Washington between April 10 to 16, he was also due to discuss reviving terms with the international lender.

Prior to landing in the US, he was expected to visit the UAE to discuss the possibilities of a $1billion deposit from them, as part of a conditionality by the Fund to secure funding assurances from allied countries.

Earlier, the IMF informed Pakistan that it has confirmation from Saudi Arabia of $2 billion in new deposits.

Since the end of January, Islamabad and the IMF have been discussing the release of $1.1 billion from a $6.5 billion bailout package decided upon in 2019. The government has reduced subsidies, abolished a fictitious exchange rate ceiling, increased taxes, and increased fuel costs in order to release the funding.

Renowned economist Atif Mian recently said that the $350 billion Pakistani economy is in a “tailspin, sliding from crisis to catastrophe” as the country dangles in the balance between a default and an IMF rescue.

“The system is unhinged,” Mian said, adding that this is evident in the growing stagflationary dynamics, in which GDP is falling off quickly and prices are rising quickly.

These are “extremely troubling” signals, the economist cautioned in a comprehensive thread on Pakistan’s economy posted on his Twitter account.

According to him, “foolish policy choices” that have negatively harmed the economy’s ability to produce goods and services are also contributing to inflation.

He said the “greater danger now is that the entire system is spiraling out of control,” adding, “we are witnessing the kind of uncertainty that leads to a flight of both money and humans, placing downward pressure on supply.