The IMF-requested changes were blocked, so the United States urged Pakistan to go forward with them on Thursday, providing technical assistance as the world's fifth-most populous country navigates an economic crisis.
Pakistan and the IMF agreed to a $6.5 billion rescue package in 2019, but less than half has been delivered because of the nation's violation of the terms.
According to Elizabeth Horst, the State Department official in charge of Pakistan, “the reform(s) that Pakistan and the IMF agreed to are not easy, but it's crucial that Pakistan take these actions to bring the country back to sound financial footing, avoid incurring further debt, and grow Pakistan's economy.”
She said at the Wilson Center think tank that “the United States will continue to support Pakistan through technical engagements and assistance, particularly when it comes to encouraging Pakistan to enact policies that promote an open, fair, and transparent business climate.”
In order to aid low-income households, the International Monetary Fund wants Pakistan to increase its pitifully small tax base, abolish tax exemptions for the export industry, and hike artificially cheap costs for gas, electricity, and oil.
The biggest donor to the IMF, the United States, too has a delicate relationship with Pakistan, an ally throughout the Cold War and “war on terror” who yet maintained links to the Taliban in Afghanistan.
Earlier this month, Pakistan announced a $1.3 billion boost from two important allies, China and the United Arab Emirates.