IMF Review Delay.

With the prevailing uncertainty over the next round of talks with the IMF and ongoing political turmoil, Pakistan's default risk as measured by five-year credit-default swaps (CDS) has risen sharply. According to reports, the CDS soared to 75.5 percent on WednesAday from 56.2 percent a day ago. This sharp increase reflects a grave situAation, making it increasingly difficult for the government to raise foreign exchange from markets either through bonds or commercial borrowings.

Sources in Washington last week claimed that the schedule for talks beAtween the IMF and Pakistan had been readjusted, but that the negotiations were ongoing. However, there were other reports claiming that the talks were rescheduled after last month's release of a World Bank report on flood damages in Pakistan. There was in fact another round of engagement on Thursday, but the two sides could still not finalise a schedule for formal talks on the overdue ninth review of a $7 billion loan programme.

This continued uncertainty will add to the growing fears of default. Therefore, it is crucial that the hurdles which are causing delays are adAdressed urgently. These are mainly the lack of clarity on flood-related fiAnancial requirements for this fiscal year and declining revenue stream in the wake of import controls. Some outstanding issues...

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