Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva has expressed the hope that Pakistan will successfully complete the current loan programme and not face the same situation as Sri Lanka and Ghana, but Pakistan is at risk of bankruptcy. She says that Pakistan has not got there though and it is better not to get there. Delivering her speech at the annual meeting of the International Monetary Fund (IMF) and the World Bank in Washington on Thursday, the IMF chief said there is no doubt that Pakistan is facing climate challenges, but there is hope from the steps taken by the Pakistani authorities will successfully complete this programme.

Kristelna Georgieva said at this time they were talking about providing financial guarantees of Pakistan. “To be at the forefront of change, one must think about the future sustainability of agriculture in Pakistan.” Kristelna Georgieva said that they are working hard together with the Pakistani authorities, and the country should create such a political framework that avoids economic risks. “We want Pakistan to move towards sustainable economic development. We want assurance of financial support.”

Asked about the risk of Pakistan failing, the IMF chief replied that Pakistan has not yet reached that point and it is better not to, to avoid the consequences of a growing global trade divide for all countries to prevent a second Cold War. “I am one of those people who know what the consequences of the Cold War were, the Cold War was a great loss of competence and partnership in the world, institutions such as the World Bank, the IMF were important in preventing the world from dividing into different blocs. It has character.” The IMF managing director said that policymakers should play an important role in protecting the interests of their citizens. “If we do not show realism, people everywhere will be in a bad situation. There is a possibility of a 7% drop, the distribution of global trade has increased due to Brexit, the US trade war, China and the Ukraine conflict.”

Since early February, Pakistan has been negotiating with the IMF to revive the $7 billon bailout programme to secure $1.1 billion tranche. Pakistan hopes that the deal will also unlock funds from other donors waiting for IMF’s endorsement. Later at a news briefing in Washington, Kristalina Georgieva said “My hope is that with the goodwill of everyone, with the implementation of what has been already agreed by the Pakistani authorities, we can complete our current programme successfully.”

She pointed out that the Fund’s projected global 2.8 percent in 2023 was “the weakest medium-term forecast in decades”. The growth will remain weak, at around 3pc, over the next five years, she added. “Underlying inflation remains stubbornly high, geo-economic fragmentation affects trade and capital flows, and downsides risks have increased,” she warned. “Fighting inflation and safeguarding financial stability have become more complex with the recent banking sector pressures.”

Responding to a question about the impact of climate change on Pakistan’s economy, Ms Georgieva said in 2011 she had the opportunity to see what climate change meant for the people of Pakistan. “And I know that (last summer’s) flood is much more dramatic than the one I witnessed,” she added. “No question Pakistan will continue to be on the frontline of the climate crisis. And that means that communities also think about the future of agriculture in a more climate sustainable manner,” she said.

Responding to a question about IMF-Pakistan talks for the revival of the 2109 loan package, Ms Georgieva said: “We have been working very hard with the authorities in Pakistan within the context of our current programme to make sure that Pakistan has the policy framework that makes it possible to avoid what you are talking about.” The reporter who asked the question had hinted at the possibility of Pakistan’s burgeoning debt becoming unsustainable. But Ms Georgieva said the purpose of the IMF-Pakistan talks was to avoid getting to a point where the country’s debt may become unsustainable. “We are not there yet and it’s better not to get there,” she said.

The IMF and Pakistani officials, she said, were also discussing how to support Pakistan “in terms of providing financial assurances so we can complete the programme”. She also said that the IMF is in discussions with friendly countries of Pakistan to provide financial assurances to complete the programme, expressing hope that with everyone’s goodwill and the implementation of what has been agreed upon by Pakistani authorities, the current programme can be completed successfully.

Credit: Independent News Pakistan-INP