Bloomberg suggests IMF’s hesitation may be linked to mysterious political disturbances in Pakistan.

The International Monetary Fund (IMF) is hesitant to revive the stalled bailout package for Pakistan due to heightened political uncertainty, according to Bloomberg economists Ankur Shukla and Abhishek Gupta. Capital is fleeing Pakistan due to growing concerns that the IMF will not provide a bailout, which is necessary for the country to avoid default in the coming fiscal year. The rupee plunged to a record low of 299 per dollar after the recent arrest of former Prime Minister Imran Khan, who was later released on bail. Khan’s arrest has escalated the face-off between him, the government, and the army, potentially causing the currency to fall further. Last week saw a fresh wave of violence in Pakistan, following Khan’s arrest, with protesters ransacking state and private property. At least nine people died during the unrest, which led the government to deploy army troops in two provinces. The country’s economy continues to suffer due to mounting debt and falling foreign exchange reserves. Talks of default have emerged again before the federal budget is announced on 9 June 2022.

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