The International Monetary Fund (IMF) has dismissed Pakistan’s assertion that the terms of its bailout program were the cause of the delay in holding elections in Punjab. According to Esther Perez Ruiz, the IMF’s resident representative, Pakistan has the right to reassign expenses or increase taxes to meet constitutional requirements, and there is no obligation under the country’s Extended Fund Facility-supported program that could impede its ability to carry out constitutional activities. The Election Commission of Pakistan (ECP) postponed elections in Punjab until October 8, citing a lack of security and funds to conduct elections in the province.
The clash between Pakistan and the IMF underscores the deepening trust gap between the two entities, as Islamabad struggles to meet its international and domestic constitutional obligations while blaming the global lender for its own shortcomings. This is the second time in four days that the IMF has denied Pakistan’s assertions about interfering in matters outside the ambit of the $6.5 billion bailout package. The IMF is also refusing to support the politics of the Pakistan Democratic Movement (PDM).
Ruiz clarified that Pakistan’s institutions had exclusive authority over decisions on the constitutionality, feasibility, and timing of provincial and general elections. The ECP needs Rs20.5 billion to hold elections in Punjab and Khyber-Pakhtunkhwa, and an additional Rs5 billion for by-elections for 93 vacant seats in the National Assembly. The ECP needs a total of Rs25.5 billion, which is only 0.18% of the federal government’s annual budget for this fiscal year.
In its election postponement notification, the ECP cited a statement by the federal finance secretary, claiming that the country is facing an unprecedented economic crisis due to a lack of funds and financial constraints, and that it was compelled by the IMF program, which has set targets for fiscal discipline and deficit control.
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The government would have difficulty releasing funds for general elections for the provincial assemblies of Punjab, Khyber-Pakhtunkhwa, and later for general elections for the National Assembly, as well as provincial assemblies of Sindh and Balochistan.
Last month, the federal cabinet revised budget estimates to Rs11.2 trillion, an increase of Rs1.3 trillion or 17% over the one passed just eight months ago. The government has also revised the estimate of provincial surpluses downwards to Rs559 billion, compared to the budgetary figure of Rs750 billion. Consequently, the overall deficit has been projected at Rs5.7 trillion, or 6.8% of the GDP.
The IMF’s country head stated that program discussions had only focused on economic policies to address Pakistan’s economic and balance of payments challenges, in accordance with the global lender’s mandate to promote macroeconomic and financial stability. However, Pakistan and the IMF program are deadlocked due to the failure to meet conditions for around $6 billion in additional loans and an interest rate increase.