Pak's economic crisis: IMF delegation arrives in Islamabad to hold talks on bailout package
Islamabad, Apr 29: A delegation of the IMF arrived in Pakistan on Monday to hold technical discussions for a bailout package to the cash-strapped country, days after Prime Minister Imran Khan met IMF chief Christine Lagarde in China.
Pakistan is seeking USD 8 billion from the International Monetary Fund (IMF) to bail itself out from a severe balance-of-payments crisis that threatens to cripple the country's economy. With the generous Chinese assistance, Pakistan has so far received a total of USD 9.1 billion in financial aid packages from friendly countries during the current fiscal year. According to adviser and spokesman for the Ministry of Finance Khaqan Najeeb, the IMF team will meet officials of the ministry, the Federal Board of Revenue and the State Bank during its visit.
The two sides will discuss the possibility of a USD 7 to USD 8 billion loan for Pakistan, Geo News reported. "The talks aim to determine the terms and conditions of the three-year programme," an official at the finance ministry told PTI. The details of the package will be finalised between the funds team lead by director for the Middle East and Central Asia Ernesto Meris and Finance Secretary Yunus Dhaga.
The talks will continue for about a week, the official said. Pakistan has already finalised the summary of data on various economic matters as demanded by the IMF, including details about performance of economy in the first nine months of the current fiscal year. The IMF will also get details about the upcoming budget for 2019-20 which is expected to be announced towards the end of May. Details about loans from China and the IMF insistence to increase tax-to-GDP ratio to 13.2 per cent were some of the sticking points to finalise the package. It is not clear how much assistance IMF will provide but Pakistan is expecting between USD 6-8 billion, the official said.
Pakistan was already taking measures to fulfil some of the pre-conditions to increase exports, widen tax base and adjust exchange rate. Prime Minister Khan met IMF Director Lagarde on Friday on the sidelines of the second Belt and Road Forum in Beijing, China. During the meeting, they agreed on the importance of the IMF programme for the country and reviewed the relationship between Pakistan and the global lender, the report said.
Khan had identified areas of reforms and initiatives being undertaken by his government to stabilise the economy, control inflation and achieve fiscal balance. They also agreed on the need for a social safety net for vulnerable groups of the society.
"We discussed prospects for a comprehensive policy package and international financial support to help stabilise the economy of Pakistan, and also the need to strengthen governance and protect the poor," Lagarde said in a post after the meeting.
Pakistan wants the IMF to focus on the long-term structural reforms that help revive its economy instead of attaching conditions that would be difficult to implement.