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Pakistan pivots after Imran Khan’s exit– Finance Minister Ismail’s first port of call is Washington and not Beijing

Pakistan's Finance Minister Miftah Ismail

Amid rapidly deteriorating economic situation, Pakistan’s finance minister Miftah Ismail, who took over only this week, has already reached Washington with the aim to resume negotiations at the earliest with the International Monetary Fund (IMF). Many eyebrows have raised with Washington becoming Ismail’s first port of call even as analysts maintain that the visit has little “co-relation with a third country or Pakistan’s relations with China.”

“I am off to Washington DC to try and put back on track our IMF program that PTI and IK derailed, thus endangering our economy,” Ismail, who blamed former Pakistan Prime Minister Imran Khan for the current economic mess, said in a tweet.

According to reports, the Khan government took $15 billion gross foreign loans in the last nine months alone, leading to the gross foreign debt climbing to a level of more than $57 billion during the Pakistan Tehreek-e-Insaaf (PTI) regime.

Khan took over as Prime Minister in August 2018.

“IMF is the doctor to go to when you are in a tough spot. It is not possible for a bilateral lender to fulfil that role.” Rajiv Dogra former diplomat told India Narrative.

“Pakistan’s current situation is worrisome with depleting foreign exchange reserves..the good thing is that the newly inducted government has started on the right note. After Sri Lanka’s default on its external debt, it is clear that delay in following the IMF prescription will have severe implications for Pakistan,” Dogra said.

The IMF wants Islamabad to implement reform measures and revoke the subsidies and exemptions announced by the Khan administration. Pakistan received $1 billion grant assistance from the IMF under its $6 billion Extended Fund Facility (EFF). While in 2019, IMF agreed for a bailout package, it halted assistance in January 2020, after former Pakistan Prime Minister Imran Khan refused to increase electricity tariff and impose additional taxes as prescribed by the multilateral agency.

All eyes on the status on CPEC

Pakistan’s Prime Minister Shehbaz Sharif has also stressed the need to press the pedal on the execution of the China Pakistan Economic Corridor (CPEC).

Ahsan Iqbal, Pakistan’s Federal Minister Planning, Development and Special Initiatives in an interview to Geo TV said that the country lost approximately $40 billion in foreign investment on account of the delay in execution of the projects under CPEC.

“In my opinion, we lost approximately $40 billion in foreign investment, which would have been possible had the special economic zones been completed. This money has now been diverted to Laos, Vietnam, Cambodia, and some other countries,” he said.

Meanwhile, citing poor performance, the Sharif government is also likely to dissolve the CPEC Authority, set up by Khan.  The CPEC Authority was set up to oversee the functioning of the projects. According to reports, the Sharif government could reinstate the CPEC Secretariat under the planning ministry to oversee execution of the projects.

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