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Amid economic challenges, Pak PM Shehbaz Sharif will be required to steer Islamabad out of FATF grey list

Pakistan PM Shehbaz Sharif

Will Pakistan Prime Minister Shehbaz Sharif be able to steer Islamabad out of the Financial Action Task Force’s (FATF) grey list? Pakistan’s economy has been severely dented due to the FATF’s grey listing.

An independent think tank in Pakistan Tabadlab earlier estimated an economic loss of a whopping $38 billion for the country on account of the FATF grey list.

Pakistan was first put on FATF’s grey list in 2008. However, it was removed from the list within a year. It was once again on the grey list from 2012 to 2015. Thereafter, Pakistan, which was placed in the FATF grey list in June 2018 has remained there since then.

On April 8, an anti terrorism court in the country sentenced 26/11 mastermind Hafiz Saeed to a 31 years jail term.

“This has been done keeping in mind the FATF. Now with the sentencing of Hafiz Saeed, it will be interesting to see if Pakistan can come out of its grey list under the new administration. If that happens, then getting assistance from multilateral agencies will become much easier,” an analyst told India Narrative.  

Pakistan’s former Prime Minister Imran Khan failed to get Islamabad out of the anti money laundering watchdog’s grey list despite desperate attempts.

However, Sharif will also be expected to announce bold reforms, expand the tax base and put an end to exemptions to put the economy back on track. He will also have to reset trade relations with countries including the US.

Pakistan’s total external debt in 2022-23 stands at $20 billion. As on April 8, Pakistan’s foreign exchange reserves fell further to $10.8 billion from $11.3 billion recorded the previous week.

Repayment of foreign loans—that will be the challenge for the new government in Pakistan amid dwindling foreign exchange reserves, weakening currency and burgeoning inflation

“In Pakistan, all leaders talk of fixing the economy—even Imran Khan did so and promised to build ‘Naya Pakistan’ but the problem is once they come to power, they follow the same old routine of focusing on issues which are not core,” he said.

“Pakistan’s economy has suffered for years. economic problems require undertaking politically costly reforms – hence, they persist regardless of who is in office,” the News said.

All eyes are now on Sharif. Will he bite the bullet?

Also read:

Pak PM Shehbaz Sharif faces economic meltdown–clearing the mess left behind by Imran Khan will not be easy

India’s message to new Pak PM Shehbaz Sharif – Curb terrorism and we are with you