Pakistan extends bailout talks with IMF

Islamabad negotiating its second IMF loan since 2013

Pakistan has extended talks with the International Monetary Fund (IMF) after the two sides failed to agree on the terms of a bailout package, a finance ministry official said yesterday, with a final deal now expected by mid-January.

Pakistan is negotiating its second IMF bailout since 2013 and talks were expected to conclude this month during a visit by an IMF delegation to Islamabad. Finance ministry spokesman Noor Ahmad said there were still some issues to be ironed out.

“We have covered a lot of areas in terms of convergence of views,” Ahmad told Reuters. “But there is some more distance to be covered and that’s not much. Another 20 per cent of distance has to be covered.”

Ahmad said Pakistan will “stay engaged” with IMF officials to resolve the outstanding issues and “over the next two weeks we will bridge those gaps”.

A final deal is expected to be signed off by mid-January.

Pakistan is seeking its 13th bailout since the late 1980s to deal with a current account deficit that threatens to trigger a balance of payments crisis.

Pakistan has already devalued the currency five times, slashing its value by more than a quarter, and hiked its main interest rate by 275 basis points since January, to 8.5 per cent.

Analysts say more rises are on the horizon. Prime Minister Imran Khan has also obtained short-term loans worth about $6 billion (Dh29.38 billion) from historic ally Saudi Arabia.

Pakistan’s staunchest ally China has also promised to help, though it is unclear how much Beijing will contribute.