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Pakistan 'very close' to securing IMF bailout: minister

Reuters  |  ISLAMABAD 

By Asif Shahzad

(Reuters) - is likely to secure an (IMF) bailout soon to stave off a balance of payment crisis and help shore up its economy, said on Monday, as talks between and the fund continue.

A day earlier, met IMF in to discuss a bailout, and the country's foreign currency reserves have dwindled to around $8 billion, just enough to cover about two months of imports

That meeting ended with a pledge to continue talks, and while there had not been any indication of a breakthrough, Umar said an agreement was coming into view.

"Our differences have narrowed," he told business groups in the northwestern city of "It seems we have come very close to having an agreement with the IMF."

Talks with the IMF began soon after was appointed last August but a package has been held up by differences over the pace and scale of reforms that would be required to undertake.

The IMF has pressed to improve tax revenue collection, bolster foreign currency reserves and narrow a current account deficit expected to top 5 percent of this year.

Pakistani officials say they agree on the need for reforms but do not want to sign up to conditions that would derail the economy, with growth set to slow this year to around 4 percent from 5.2 percent last year.

Khan has long resisted foreign loans, once declaring he would rather commit suicide than seek an IMF loan. However Pakistan's fast depleting foreign reserves and a widening current account deficit left him little choice than to seek international assistance.

While no IMF package has been agreed, Pakistan has raised more than $10 billion in loans and credit arrangements from Middle Eastern allies such as and the as well as support from China, its partner in the vast Pakistan Economic Corridor project.

The economic turbulence facing Pakistan was underlined on Monday when Moody's Investors' Service cut its outlook on Pakistan's sector to negative, citing the banks' large holdings of government bonds "that link their credit profiles to the low-rated government."

It noted that the Pakistani rupee had depreciated by 30 percent against the U.S. dollar, interest rates had risen by 450 basis points between Dec. 2017 and Feb. 2019, and inflation was rising; "all factors which affect business and consumer confidence and the private sector's debt repayment capacities."

Earlier this month, Pakistan's credit rating was downgraded by Standard and Poor's, which cited diminished growth prospects and elevated external and fiscal stresses.

(Writing by Asif Shahzad; Editing by Simon Cameron-Moore)

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

First Published: Mon, February 11 2019. 16:58 IST