IMF conditionalities are causing energy prices to soar

A year and a half after the terrible floods that killed over 1,700 people, impacted 33 million and increased Pakistan’s public debt, the country is again trapped in the IMF’s nets. A $3 billion programme of remittance was signed with the Bretton Woods institution. As in the case of Sri Lanka, the programme includes cuts in public subsidies for gas and electricity, serial privatizations and facilities for large international investment funds investing in Pakistan.

Concretely, this results in an inflation of gas and electricity prices even more unbearable for the population: gas prices are multiplied by 4 every year and electricity prices soared by 80% over the past two years. Inflation amounts to 38% on average. Moreover, Pakistan has an external debt of $130 billion, that is 90% of its GDP. As it lacks international currencies to repay, the country contracts emergency loans with Chine, Saudi Arabia, the IMF, the United Arab Émirates in a headlong rush clearly opposed to the interests of the Pakistani people.

So Pakistan is subjected to pressure from creditors such as China or the IMF. The conditionalities imposed by the latter drag the country into an ever bigger inflation. The issue of indebtedness and submission to the IMF is therefore a crucial issue of general interest in Pakistan. It is also crucial because Pakistan is borrowing from Pakistani banks at 22% interest (it recently borrowed $400 million from them), increasing its level of indebtedness and devoting more and more of its income to repayment and interest payments rather than to education, health, etc.

In this context of enormous inflation and gradual privatization of hospitals and many other public services, hundreds of thousands of people are falling into despair and fleeing the country in the hope of finding better living conditions elsewhere.

A most unstable political situation

Now imprisoned and barred from standing in the 2024 parliamentary elections, Imran Khan and his Pakistan Justice Movement (PTI) were in power from 2018 until April 2022, the year in which his government was censured. Between 2022 and 2024, Imran Khan narrowly escaped an assassination attempt and was imprisoned for failing to declare certain “diplomatic gifts.” In spite of all these events, he has remained very popular in Pakistan and his party, which was not permitted to contest the legislative elections on 8 February 2024, fielded independent candidates and came out on top. The other parties then formed a coalition to prevent at all costs Imran Khan’s supporters from coming to power.

In short the political situation in Pakistan is most unstable and repression is very strong. This instability also affects the tense diplomatic situation between Pakistan and India, Afghanistan, and also Iran.