The Economist Intelligence Unit (EIU) said that the IMF loan programme can save Pakistan from default, but the economy of the country will remain in a precarious position.
The EIU has observed this in its report, “Sovereign debt challenges in Asia” released on Thursday.
According to the report, Sri Lanka and Pakistan were already on a high-risk path before the novel coronavirus (Covid-19) pandemic.
Pakistan along with Mongolia, Myanmar, Cambodia and Laos stand out in terms of Asian countries which are vulnerable to repayment difficulties based on economic fundamentals and external creditor relations.
The report said that Pakistan was already on the brink when it approached the International Monetary Fund (IMF) to extend the fund facility it had signed on to in 2016.
But the fund halted the three-year programme in 2021 after key domestic reforms stalled, including independence of the central bank and using foreign exchange reserves to slow the depreciation of the rupee.
The programme resumed after Islamabad passed laws on central bank autonomy and implemented fiscal austerity measures.
The EIU estimated that it expects per its baseline scenario, that the measures will help Pakistan avoid default.
