With inflation at a high of 25 per cent and the rupee falling to as low as 270 per dollar on Monday, Pakistan's economy is on the verge of collapse as the Shehbaz Sharif-led government pins its hopes on securing a bailout package from the Washington-based International Monetary Fund.
A mission from the IMF has arrived in Pakistan on Tuesday to hold talks with the officials over the implementation of its conditions attached with the assistance package, AFP reported.
The IMF has set strict preconditions for Pakistan to secure the $6.5 billion bailout program. The IMF has asked the government to allow market forces to decide the currency rates and hiked petrol prices.
Last week, Pakistan raised prices of petrol and diesel by Rs 35 each. After the rise, the price of petrol was set at Rs 249.80 per litre, high-speed diesel at Rs 262.80, kerosene at Rs 189.83, and light diesel oil at Rs 187 per litre.
Prime Minister Shehbaz Sharif has said the ruling alliance was "ready to swallow the bitter pill" of the IMF's "stringent" conditions to revive the loan programme.
Pakistan had entered a $ 6 billion IMF programme during the tenure of Imran Khan's PTI government in 2019, which was increased to $ 7 billion last year. The programme's ninth review is currently pending.
"We're at the end of the road. The government has to make the political case to the public for meeting these (IMF) demands. If they don't, the country will certainly default, and we'll end up like Sri Lanka, which will be even worse," former World Bank economist Abid Hasan told AFP.
Last year, Sri Lanka plunged into crisis after it defaulted on its debt and saw massive protests as people faced months of food and fuel shortages. The protests ultimately forced the country's president to flee overseas and resign.
However, even if Pakistan manages to secure the IMF package, it will provide only short-term relief.
Forex reserves have dwindled to $4.34 billion (from $16.6 billion a year back), barely enough to cover three weeks of imports, Bloomberg reported. Pakistan's long-term debt has shot up to $274 billion, with some $8 billion due for re-payment this quarter.
Earlier this month, a nationwide power outage in Pakistan left nearly 220 million people without electricity for successive days.
"Pakistan had hoped that as in the past the triple As (Army, America and Allah) will somehow come to its aid again. However, times have changed ... Army itself is a major cause of Pakistan's financial problems as it absorbs the bulk of its budget. America is suffering from aid fatigue. In desperation, Pakistan's finance minister has now appealed to Allah," PTI quoted Ambassador Rajiv Dogra, former permanent representative to UN's Food and Agriculture Organisation and earlier India's last consul general to Karachi, as saying.
In an election year, both PM Sharif and Finance Minister Ishaq Dar have publicly targeted Imran Khan's PTI for Pakistan's present day economic crisis.