LONODN (BBC) - Eleventh-hour negotiations between Pakistan and the International Monetary Fund (IMF) have failed to unlock $1.1bn in crucial funds aimed at preventing the country from going bankrupt.
A deepening economic crisis has all but emptied Pakistan’s foreign exchange reserves, leaving it barely enough dollars to cover a month of imports and it is struggling to service sky-high levels of foreign debt.
The IMF team, which left Islamabad on Friday, said “considerable progress” had been made after 10 days of talks.
“Virtual discussions will continue in the coming days,” the head of the IMF mission Nathan Porter said in a statement.
Although there was no financial lifeboat, both sides tried to paint the meeting positively. Pakistan’s finance minister told a news conference the country had been given a detailed roadmap. He talked of “painful but necessary” reforms - the IMF wants to see action and commitments from Pakistan before it commits to lending more money.
In January annual inflation soared to over 27%, the highest it’s been in Pakistan since 1975, and there are mounting fears for the economy in a pivotal election year.
This week the rupee sank to a historic low of 275 to the dollar, down from 175 a year ago, making it more expensive for Pakistan to buy and pay for things.
The lack of foreign currency is one of the most pressing of Pakistan’s problems.
Factories like Jubilee Textiles in Faisalabad, the industrial heartland of Pakistan, were shut recently - not by the frequent power cuts that have dogged Pakistan for years, but because they couldn’t get hold of dollars to pay for the goods they need.
Jubilee’s printing machines have only just restarted after shutting last month. Piles of white cotton sheets sat in iron tubs, covered by a light coat of brick dust, when the BBC visited, with the only sound the drip, drip of an industrial washer.
According to analysts, the government had been holding the bank’s exchange rate artificially high behind the scenes which was contributing to the lack of dollars in the system.