New Delhi, March 9 – Pakistan's ongoing conflict with Afghanistan has put at risk the next installment of IMF funding that Islamabad urgently needs, according to a media report.
The IMF team is currently visiting Pakistan for its third review of the country's economy, ahead of the next tranche of funding. The team is closely examining whether the economic decisions that Islamabad is taking meet the requirements set by the multilateral lending institution to ensure that Pakistan's economy recovers so that it can repay the loans, according to the report in the South China Morning Post.
However, the ongoing conflict with Afghanistan and increased military spending make it difficult for Pakistan to meet the economic conditions set by the IMF for providing further funding. The investment climate in the country has been negatively affected, and the conflict has also led to increased inflation. These are all factors that the IMF team will consider when assessing Pakistan's eligibility for the loan.
"For any country in Pakistan's position, IMF support comes with certain non-negotiables: staying on track with reform commitments, implementing structural changes, and demonstrating financial discipline. A shooting war along a major border does not help any of those metrics, and it affects the numbers that the IMF scrutinizes most closely," the report stated.
It further points out that a delay in the IMF program could also dampen investor sentiment, which had strengthened significantly over the past year.
According to the report, the conflict with Afghanistan also endangers China's investment in Pakistan.
"The China-Pakistan Economic Corridor – a sprawling US$65 billion infrastructure network – represents one of Beijing's most ambitious undertakings under its Belt and Road Initiative, threading through some of Pakistan's most exposed terrain. Every escalation along the western frontier puts that infrastructure at risk," the report said.
Meanwhile, the US-Israel war on Iran has disrupted oil and gas supplies across Asia, sending energy costs and transport prices soaring. This is bound to increase the inflation rate in Pakistan and further weaken its fragile economy, the report added.
