Pakistan will struggle to mitigate default risk

Significance

The programme was revived in August 2022 after a hold-up and extended to June 2023, but completion of the review linked to the latest tranche is now several months behind schedule. Meanwhile, there is uncertainty over whether the country can meet its near-term debt obligations.

Impacts

• Islamabad will urge Washington, an ally and the IMF’s largest shareholder, to help it in its talks with the Fund.
• The government will remain under pressure to implement economic reforms in line with IMF conditions.
• Heightened political tensions will make it harder for the administration to focus on easing the economic crisis.