Pak­istan for­mally asks IMF for a bailout pack­age

The Financial Daily - - CONTINUATIONS -

NUSA DUA: Fed­eral Min­is­ter for Fi­nance Asad Umer called on In­ter­na­tional Mone­tary Fund (IMF) Manag­ing Di­rec­tor and chair­per­son Chris­tine La­garde on Thurs­day to for­mally re­quest the global body for pro­vid­ing fi­nan­cial as­sis­tance to cush­ion the sink­ing econ­omy of Pak­istan.

Gov­er­nor State Bank Tariq Ba­jwa and other of­fi­cials of Econ­omy Di­vi­sion were present dur­ing the meet­ing.

The IMF Chief also con­firmed the news of meet­ing with the Min­is­ter and other Pak­istani of­fi­cials and said in a state­ment, "Dur­ing the meet­ing, they re­quested fi­nan­cial as­sis­tance from the IMF to help ad­dress Pak­istan's eco­nomic chal- lenges."

La­garde also in­formed that an IMF team will visit Is­lam­abad in the com­ing weeks to ini­ti­ate dis­cus­sions for a pos­si­ble IMF­sup­ported eco­nomic pro­gram.

This comes days af­ter Prime Min­is­ter Im­ran Khan gave the green sig­nal to ap­proach the IMF for a bailout pack­age.

Fi­nance Min­is­ter Umar said that the coun­try has no choice but to go to the IMF. "We will have to take a loan to sup­port the fall­ing econ­omy." The min­is­ter said that Pak­istan will have to make tough de­ci­sions to fix the econ­omy.

Ac­cord­ing to a state­ment re­leased by Min­istry of Fi­nance, the gov­ern­ment, af­ter tak­ing into ac­count the cur­rent sit­u­a­tion and con­sul­ta­tion with the lead­ing economists, de­cided to ap­proach the IMF for sta­bi­liza­tion and an "eco­nomic re­cov­ery pro­gram".

"The gov­ern­ment in­her­ited 6.6% of fis­cal deficit, more than a tril­lion ru­pees of un­ac­counted for losses in the en­ergy sec­tor and an un­prece­dented and de­bili- tat­ing cur­rent ac­count deficit run­ning at $2 bil­lion a month. To cor­rect the un­der­ly­ing im­bal­ances, fis­cal and mone­tary ac­tions needed to be un­der­taken with­out de­lay," reads the state­ment.

"It is es­sen­tial to re­mem­ber that there is a his­tory of Pak­istan re­peat­edly go­ing to the IMF with ev­ery new gov­ern­ment be­ing forced to go with IMF pro­gram due to legacy of those who held power in the pre­vi­ous gov­ern­ment," the min­istry noted.

For weeks an­a­lysts have warned that a new cur­rent ac­count cri­sis could un­der­mine Pak­istan's cur­rency and its abil­ity to re­pay bil­lions in debts or pur­chase im­ports.

Pak­istan has gone to the IMF re­peat­edly since the late 1980s. The last time was in 2013, when Is­lam­abad got a $6.6 bil­lion loan to tackle an eco­nomic cri­sis. How­ever, there are fears that the terms of any new loan will be more strin­gent than those in 2013, due to tense re­la­tions with the US, the lender's big­gest donor. - NNI

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