Gripped in its worst political turmoil, neighbouring Pakistan seems moving fast towards a possible political chaos. Pakistan's two major parties – the Pakistan Muslim League-Nawaz (PML-N) and the Pakistan People's Party (PPP), both have accused former Prime Minister, Imran Khan for the long-stretched turbulence that according to them finally affecting the country's diplomatic dealings.
Provincial elections in Khyber Pakhtunkhwa and Punjab, both of which have recently seen an increase in violence, are also on the political horizon. These will be followed by general elections at the end of the year, making it extremely difficult for the IMF to decide whether to release a loan in such volatile conditions.
According to Pakistani media, the IMF agreement with Pakistan, which has been on the verge of being signed for several days, will not take place due to political instability. According to reports, the IMF wants assurances from the country that any future regime in the country will honour the agreement signed now for a $7 billion fund.
With open hostility between political parties, the IMF is unlikely to obtain assurances from various politicians, particularly Khan's Pakistan Tehreek-e-Insaf (PTI), that they will abide by IMF conditions.
Another reason for the IMF loan delay could be the international lender's requirement that Pakistan's bilateral lenders provide pledges to restructure its existing loans. China, Pakistan's main lender and staunch economic partner, remains adamantly opposed to debt restructuring. Beijing is treating Pakistan with the same contempt it has shown for its other strategic ally in South Asia, Sri Lanka. Despite signing a staff-level agreement with the IMF in September 2022, the Indian Ocean island nation is still waiting for a loan from the IMF because Beijing has refused to assist Colombo in restructuring its bilateral debt.
With rising violence in border areas with Afghanistan, rising nationalism in Balochistan and Sindh, and its attrition politics, Pakistan's Gulf friends with deep pockets are hesitant to commit additional support. Instead, friendly countries have made noises in recent months about investing in Pakistan but not providing easy money.
The Gulf nations, including Saudi Arabia and Qatar, have taken note of the powerful nationalist movement in Balochistan, where Baloch fighters have engaged Pakistan's security forces in an ongoing conflict. The nationalist movement in Balochistan has ensured that Islamabad's relations with Beijing have reached rock bottom, with attacks on Chinese nationals working to implement the $64 billion China Pakistan Economic Corridor (CPEC).
The CPEC is a massive economic and diplomatic failure for both Pakistan and China, as both face economic losses and unfulfilled dreams.
The United States is the other friendly country approached by the ruling regime. According to reports, Foreign Minister Bilawal Bhutto sought Washington's help in convincing the IMF to extend an early loan during his visit to New York on International Women's Day. Back in Islamabad, the finance ministry is said to have reached out to US officials in an attempt to break the impasse with the IMF.
Just yesterday, American Ambassador to Pakistan Donald Blome assured Islamabad that the US is eager to assist Pakistan in obtaining the IMF loan.
As friendly countries play it safe with Pakistan, and its own politicians pave the way for the country with good intentions, the IMF appears to be waiting and playing it safe with a country that has already taken at least 22 IMF loans and is eagerly awaiting its 23rd amid political turmoil, poor governance, rising violence, and economic uncertainty.
