Pakistan formally asks IMF for a bailout package
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