#Pakistan’s most powerful man #GeneralBajwa has reached out to #Washington to request help in securing an early loan dispersal from the #IMF.
General Qamar Javed Bajwa is largely considered Pakistan’s most powerful man and he reached out to Washington to request help in guaranteeing an early loan dispersal from the International Monetary Fund to avoid a default.
The General spoke by phone with U.S. Deputy Secretary of State Wendy Sherman in a highly unusual move earlier this week, according to sources from both the U.S. and Pakistan.
The sources, who requested anonymity because they were not authorized to speak publicly, said Bajwa made an appeal for the White House and Treasury Department to push the IMF to immediately supply nearly $1.2 billion that Pakistan is due to receive under a resumed loan program.
The IMF is going into recess for the next three weeks and its board will not convene until late August. No firm date has been set for announcing the loan approval for Pakistan, according to an IMF official who also spoke on condition of anonymity.
The IMF already granted Pakistan “staff-level approval” for the loan in question on July 13. But the transaction — part of the IMF’s $6 billion Extended Fund Facility for Pakistan — will only be processed after the multilateral lender’s executive board grants final approval.
Pakistan is undergoing severe inflation and the rupee has been plummeting against the dollar. The rupee continued to reach an all-time low — its poorest performance since 1998 when Pakistan tested nuclear weapons and lost investor confidence — it was not immediately clear if Gen. Bajwa had managed to convince the U.S. administration. Pakistan has less than $9 billion in foreign reserves left, covering under two months of import bills. On Thursday, S&P Global downgraded Pakistan’s outlook to negative from stable.
The U.S. is the largest shareholder in the fund, founded in 1945. While Washington has voted for funding Pakistan in the past, the Trump administration openly voiced its uneasiness about the country using IMF loans to pay back China.
With comparisons being drawn to Pakistan’s crisis-plagued neighbor Sri Lanka, the stakes of default for the nuclear-armed Islamic republic are higher. Pakistan has a massive population of over 220 million; has borders with China, India, Iran, and Afghanistan; is fighting Islamist as well as separatist insurgencies; and sits on the intersection of the Persian Gulf and the Indian Ocean.
Bajwa’s appeal comes in the wake of separate meetings between senior civilian Pakistani and American officials in July, none of which managed to negotiate an early disbursement of funds.
“Several senior Pakistani officials have met with the U.S. and other key stakeholder nations in the IMF and World Bank in the past week to register concerns about the timing of IMF Executive Board decisions, pressing to expedite review of Pakistan’s progress on prior actions,” said an official familiar with the proceedings.
According to sources, the lack of progress in those meetings spurred Gen. Bajwa, commander of the 650,000-strong military, to get Washington’s attention when other emissaries could not deliver.
“This reflects the Pakistan army’s concerns about the state of the economy,” said Hussain Haqqani, Pakistan’s former ambassador to Washington and currently the director for South and Central Asia at the Hudson Institute in Washington. “It also reflects that the Pakistan army chief is the authority with whom the global players feel the final word rests.”
“Gen. Bajwa calling the U.S. administration, if he has done so, suggests that he is assuring the U.S. — and through the U.S. the IMF — that any promises made will be kept.”
However, while officials familiar with the exchange admitted that the currency and foreign reserves situations were worrisome, they also reported progress on the IMF finance facility.
“If the government can get through this tough month, there are good opportunities to stabilize the economy, but August will not be easy,” one official said.
Meanwhile, in public, the governor of Pakistan’s central bank has insisted that the fear of default is overblown. Gov. Murtaza Syed has told the media that financing needs for the next 12 months will be met. He has admitted that Pakistan would rather get the IMF funding sooner rather than later, but also detailed that Islamabad is negotiating with Saudi Arabia and China — two countries that Gen. Bajwa visited recently — to score supplemental financing.
People rush to buy low-priced food and there is a peaking fear that the crisis may duplicate Sri Lanka.