The International Monetary Fund (IMF) has raised concerns over persistent political uncertainty in Pakistan despite the February 8 elections, emphasizing potential implications for economic reforms.
Despite the formation of a new government, the IMF highlighted challenges in implementing policy reforms amidst a complex political landscape.
According to the IMF, the new government has pledged to uphold policies outlined in the standby arrangement. However, the IMF cautioned that complications arising from political instability, inflation, and social tensions could hinder reform implementation.
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A key concern outlined in IMF documents is the fear of mounting pressure on debt and exchange rates due to delays in implementing economic policies and a decrease in external financing. The report underscores heightened pressure on banks to lend to the government in case of delay in external financing, thereby reducing financing capacity for the private sector.
Moreover, external factors such as fluctuating commodity prices, shipping constraints, and tighter global financial conditions could further destabilize the economy, according to the IMF report.
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Following the elections, a coalition government comprising the Pakistan Muslim League-Nawaz (PML-N) and the Pakistan Peoples Party (PPP) has been formed, as indicated in IMF documents. However, the independent candidates affiliated with the Pakistan Tehreek-e-Insaf (PTI) received more votes than other political groups.
Despite PTI-backed members forming a significant opposition bloc in the National Assembly, the IMF stresses the importance of bipartisan cooperation to address economic challenges effectively.
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