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Pak to seek USD 6-7 billion IMF bailout: FM

Press Trust of India  |  Islamabad 

has said it would approach the IMF for a package of USD 6 to 7 billion to address the mounting crisis faced by the cash-strapped country.

on Monday said has endorsed the decision to seek assistance from the (IMF).

"After taking into account the current situation and consultation with leading economists, the government has decided to approach the IMF for a programme," Umar said in a recorded video message.

is likely to request the IMF to provide it USD 6 to 7 billion, Geo reported.

The government took the decision after friendly countries did not bail it out even though Khan himself went to with a "begging bowl", the Express Tribune reported.

to the on Commerce Razak Dawood, who accompanied the premier, said "it was awful to beg from Saudi Arabia".

Umar said talks with the IMF will start immediately as Khan approved the decision after consultations.

"It was decided today that we should start negotiations with the IMF for a stabilisation and recovery programme so that we should bring the current difficult economic situation under control," Umar said in the message.

He said the country is going through a tough time.

Sources said needs at least USD 9 billion to meet the current account deficit.

An assessment by the State Bank of and the showed that Pakistan needed USD 11.7 billion to service its external debt in the current fiscal year 2018-19.

"We have to find a way to get out of this difficult situation," Umar said.

Sources in the said the government explored all options including asking friendly countries for support as well as seeking donations from overseas Pakistanis before going to the IMF.

However, they said the IMF would demand Pakistan reduce its non-development expenses to bring down the budget deficit.

The sources said the world body will also ask to expand the tax net in the country, and added that the IMF also wants Pakistan to decrease circular debts and losses in state institutions, the report said.

Umar is expected to lead a delegation to attend the annual meeting of the IMF and in Bali, from October 12 to 14, where he will start initial talks for the package.

It may take a few months before the agreement is reached and money starts pouring in from the IMF, the report said.

The IMF assistance should be enough to bridge the deficit gap and support the plummeting foreign exchange reserves which have plunged below USD 10 billion, it said.

The government has come under criticism from various quarters, including the opposition, for delaying the decision to approach the IMF soon after won the on July 25.

The decision will create hardship for Khan as IMF's tough conditions will surely result in price hike.

Pakistan has availed 12 IMF bailouts since the late 1980s. The last one was in September, 2013 when the IMF approved a USD 6.6 billion loan support to the government's programme to stabilise its and boost growth while expanding its social safety net to protect the poor.

Meanwhile, the Pakistani rupee on Tuesday also suffered massive devaluation after the government's decision.

reported that the interbank rate of the US dollar was at Rs 124 as the market opened, but rose to Rs 138, then dipped slightly to Rs 133.

The open market rate is Rs 134 to Rs 135, according to Zafar Paracha, Secretary,

Currency dealers fear the alarming increase will fan panic in the market for dollars, causing a buying frenzy for the US dollar.

They speculate that the sudden increase in the price of the dollar could be a result of rupee devaluation by the (SBP) in order to get the IMF package.

The IMF has demanded the government devalue the rupee by at least 15 per cent.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, October 09 2018. 17:35 IST
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