The IMF’s conditions are stringent, aimed at ensuring the country’s loan repayment capacity, highlighting its lack of trust in the government. Pakistan borrows from the IMF to repay project loans due to its inability to generate sufficient foreign exchange. The recent China-Pakistan Economic Corridor (CPEC) has amplified the IMF’s interest in Chinese loans to Pakistan, including restrictions on using IMF loans to service CPEC debt to China. Lenders hesitate to provide loans to a country on the brink of default, resulting in prohibitively high interest rates. Pakistan’s reliance on the IMF underscores the need for long-term economic reforms.

Source: The Nation August 08, 2023 20:49 UTC