ISLAMABAD: The International Monetary Fund (IMF) today said record inflation can trigger protests causing instability in Pakistan.
In Pakistan, inflation has hit a 47-year-high in August 2022. The full impact of massive flooding on the prices of food items and other commodities is yet to come.
“High food and fuel prices could prompt social protest and instability,” the IMF said, in an executive summary of the seventh and eighth reviews, released under the Extended Fund Facility (EFF) on Friday.
The IMF Executive Board approved $1.16 billion tranche under the seventh and eighth review of the stalled Pakistan programme. The State Bank of Pakistan (SBP) received the much-needed $1.16 billion deposit this week.
The IMF report said that risks to the outlook and programme implementation remain high and tilted to the downside given the very complex domestic and external environment.
The spillovers from the war in Ukraine through high food and fuel prices, and tighter global financial conditions will continue to weigh on Pakistan’s economy, pressuring the exchange rate and external stability, report said.
According to IMF, the policy slippages remain a risk, as evident in FY22, amplified by weak capacity and powerful vested interests, with the timing of elections uncertain given the complex political setting.
