KARACHI: The finance division on Tuesday “strongly” rebutted reports that the government was considering imposing an economic emergency in the country, saying it had put in place a number of austerity measures to deal with a difficult economic scenario.
The South Asian nation, which is reeling from devastating floods that are estimated to have caused over $30 billion of damage, has been facing a balance of payments crisis with fast-depleting foreign reserves and a widening current account deficit.
Referring to a “false message” on economic emergency proposals, the finance division said:
“Finance Division not only strongly rebuts the assertions made in the said message but also categorically denies it and that there is no planning to impose economic emergency.”
The division said the message was aimed at creating “uncertainty” by those who did not want Pakistan to prosper and were against the “national interest.” It attributed Pakistan’s economic crisis to “exogenous factors” like the Russia-Ukraine war, global recession, trade headwinds, a commodity super-cycle, and devastation caused by record-breaking floods this summer.
With the reserves down to hardly one month of imports, Pakistan desperately needs bilateral and multilateral external financing as it awaits the 9th review of a $7 billion bailout package from the International Monetary Fund (IMF), pending since September.
Both Pakistan and the IMF said last week that pre-review talks had begun online.
The IMF approved the seventh and eighth reviews together in August for the bailout program agreed in 2019, to allow the release of over $1.1 billion.
In its press release, the finance division said negotiations with the IMF on the ninth review were at an “advanced stage.”