ISLAMABAD (AP) — The International Monetary Fund delayed a $6 billion bailout for cash-strapped Pakistan over its failure to meet the terms of a previous deal, officials said Friday, as the country struggled with a worsening economic crisis and a deadly wave of violence.
Pakistani officials said progress had been made toward reviving the bailout. A critical part of the loan, $1.1 billion, has been on hold since December as officials reviewed the country’s compliance with a 2019 agreement.
The stall reflects Pakistan’s struggle for economic stability after summertime floods killed 1,739 people, destroyed 2 million homes and caused $30 billion in damage. The impoverished country also has been hit by a wave of violence, including a mosque bombing last month in Peshawar that killed 101 people.
Analysts say the revival of the IMF’s bailout will help Pakistan because a release of the next installment of loans could encourage other international financial institutions to help the Islamic nation.
Prime Minister Shahbaz Sharif blames his predecessor, Imran Khan, now the opposition leader, for violating the terms of the 2019 agreement. Khan was ousted through a no-confidence vote in the parliament in April.
Pakistan wants to avoid defaulting, but it’s struggling under depleting foreign exchange reserves, which have fallen to below $3 billion. Analysts say that’s enough only to pay for imports for the next two weeks.
The IMF said in a statement that “virtual discussions will continue in the coming days” to make progress on the deal.
The fund has given new instructions to Pakistan to raise and collect taxes, as well as slash subsidies without burdening poor people, government officials said.
Sharif last week warned that Pakistan would have difficulty complying with the IMF’s conditions.
On Friday, Pakistani Finance Minister Ishaq Dar said Pakistan will impose additional taxes of 170 billion rupees and slash subsidies to meet the deal’s terms.
Associated Press writer Jon Gambrell contributed to this story from Dubai.