Pakistan Seeks US Help to 'Revive' Economy, Calls for 'Cordial Ties'

Ties between Pakistan and the US, allies during the War on Terror, were strained after former Prime Minister Imran Khan blamed the Biden administration for his being ousted in April. The new Pakistani government has tried to repair its ties with Washington, with a series of high-level visits from Pakistan to the US having taken place since May.

Tariq Fatemi, the Special Assistant on Foreign Affairs to Pakistani Prime Minister (SAPM) Shehbaz Sharif, has told US Deputy Secretary of State, Wendy Sherman, that Islamabad is relying on Washington to help "revive" the South Asian nation's economy.

The two delegates met in Washington on Thursday, according to an official statement by the Pakistani Embassy in the US.

The embassy statement said that Fatemi called for “close and cordial ties” between the two governments during his time with Sherman.

The meeting marked the second high-level engagement between the two sides since the new Pakistani government came to power in April; Foreign Minister Bilawal Bhutto Zardari visited Washington in May.

The previous Prime Minister Imran Khan blamed the US for instigating the process by which he was ousted in a no-confidence vote in parliament in April.

Pakistan’s Economic Crisis

The meeting comes as Islamabad faces an economic crisis, with dwindling foreign reserves, rising inflation and a currency that hit a record low against the US dollar this week.

The State Bank of Pakistan (SBP) said this month that Islamabad’s foreign exchange reserves of around $9.8Bln are only enough to pay for imports for 45 days.

The economic woes have prompted major ratings agencies such as Fitch and Moody’s to revise their growth forecast for Pakistan in recent weeks. Fitch downgraded its forecast from “stable” to “negative” this week.

The Sharif government, which came to power only in April, has been negotiating the grant of a $1.1Bln tranche of an Extended Financing Facility (EFF) with the International Monetary Fund (IMF) to ease the crisis.

However, the IMF has attached a string of conditions with its bailout package, including a “restraint” on budgetary spending, power sector reforms, monetary policy action to tame inflation and strengthening of the country’s anti-corruption institutions.

According to media reports, the IMF has also urged the Pakistan government to stop subsidizing fuel prices. Prices of petrol were raised by a third last month by the Sharif government, only to be revised downwards on 14 July after the agreement with the IMF.

Pakistan daily newspaper, the Express Tribune, quoted diplomatic sources as saying that SAPM Fatemi asked Sherman to persuade the IMF to ease some of the conditions of the bailout package.