Roving Periscope: As the Saudis warn it against beggars, Pakistan gets a fresh IMF lifeline of $7bn
Virendra Pandit
New Delhi: A day after Saudi Arabia warned Pakistan against sending beggars in the guise of pilgrims, the pauperized country was happy on Thursday when the International Monetary Fund (IMF) extended yet another lifeline, approving a long-awaited USD 7 billion bailout deal for its ‘bowling’ economy.
On Tuesday, an angry Jeddah asked Islamabad to take action against the growing number of Pakistani beggars visiting that country under the guise of religious pilgrimage, the media reported.
According to Pakistan’s Express Tribune newspaper, the Saudis also warned that if the situation is not controlled, it could negatively affect Pakistani Umrah and Hajj pilgrims.
“The Saudi Ministry of Hajj has issued a warning to Pakistan’s Ministry of Religious Affairs, demanding action to prevent Pakistani beggars from entering the Kingdom under Umrah visas,” the newspaper said.
In response, Pakistan’s Ministry of Religious Affairs said it would introduce an “Umrah Act,” to regulate travel agencies facilitating Umrah trips and bringing them under legal oversight, the paper said.
In May, the Saudi government issued a fatwa, or edict, prohibiting Hajj without a permit. It also fixed a penalty of 10,000 Riyals (around PKR 2.22 lakh) and deportation for the violating visitors.
In September 2023, 16 beggars disguised as pilgrims were offloaded from a Saudi Arabia-bound flight and arrested for trying to travel to the Gulf Kingdom to indulge in begging.
Ninety percent of beggars arrested in foreign countries belonged to Pakistan.
Even Pakistan Prime Minister Muhammad Shehbaz Sharif lamented that many countries ignore Pakistani visitors lest they ask for alms!
Against this backdrop, Pakistan’s benchmark share index hit a lifetime high in opening trade on Thursday, hours after the IMF’s board approved a USD 7 billion bailout package to shore up its economy, the media reported.
The IMF said the new program will require “sound policies and reforms” to strengthen macroeconomic stability and address structural challenges alongside “continued strong financial support from Pakistan’s development and bilateral partners.”
The global lender will facilitate an immediate disbursement of about USD 1 billion, it said.
Pakistan’s stock benchmark extended gains in early trade and was last up 0.8 percent at a new high of 82,905.73.
“We will need to take difficult decisions if we want to make it our last program with the IMF,” Ali Pervaiz Malik, Pakistan’s junior finance minister, told local Geo News TV on Thursday.
On the sidelines of the UN General Assembly in New York on Wednesday, talking to reporters, PM Shehbaz Sharif thanked IMF Managing Director Kristalina Georgieva and said the country would continue to implement the tough economic reforms agenda.
Georgieva also congratulated Pakistan for moving forward with “home-defined” reforms. “The economy is on the sound path,” she told reporters after the board meeting. “Growth is up and inflation is down,” she said.
Islamabad had been working on implementing conditions, which PM Sharif had previously called “strict” to secure the 37-month loan program agreed upon in July.
The IMF said that Pakistan had taken key steps to restore economic stability with consistent policy implementation under the 2023-24 standby arrangement.
Growth had rebounded to 2.4 percent and inflation has receded significantly, falling to single digits, amid appropriately tight fiscal and monetary policies.
A contained current account and calm foreign exchange market conditions have allowed the rebuilding of reserve buffers, and the central bank of Pakistan has been able to cut the policy rate by a total of 450 bps since June, the IMF statement said.
Despite this progress, it said, Pakistan’s vulnerabilities and structural challenges remain formidable, adding that the tax base remains too narrow.
“Without a concerted adjustment and reform effort, Pakistan risks falling further behind its peers,” it warned.
Pakistan has been struggling with boom-and-bust economic cycles for decades, leading to two dozen IMF bailouts since 1958.
The South Asian country is the IMF’s fifth-largest debtor, owing the Fund USD 6.28 billion as of July 11, according to the lender’s data.
The latest economic crisis has been the most prolonged and has seen Pakistan facing its highest-ever inflation, pushing the country to the brink of a sovereign default last summer.
Inflation has since eased and credit ratings agency Moody’s has upgraded Pakistan’s local and foreign currency issuer and senior unsecured debt ratings to ‘Caa2’ from ‘Caa3’, citing improving macroeconomic conditions and moderately better government liquidity and external positions.
