Pakistan nears deal with IMF for bailout package - Ministry of Finance

ISLAMABAD: Pakistan’s Ministry of Finance said on Monday that negotiations with the International Monetary Fund (IMF) for a three-year bailout package have been finalized, a move that could help stabilize the economy and ease pressure on the country’s dwindling foreign exchange reserves.
Islamabad has been negotiating a deal with the IMF since November last year to stave off the possibility of a balance-of-payments crisis. However, the agreement got delayed due to “tough economic conditions” which the the Fund had imposed prior to signing the deal.
“All the things have been agreed [with the IMF] in principle, and hopefully a technical mission of the IMF will visit Pakistan by the end of this month to finalize the modalities,” Dr. Khaqan Hassan Najeeb, spokesperson for the Ministry of Finance, told Arab News on Monday.
Finance Minister Asad Umar returned to Pakistan on Monday after his five-day visit to the United States, where he – alongwith members of his delegation – participated in the IMF-World Bank spring meetings.
The finance minister is expected to brief the federal cabinet on Tuesday about his talks with the IMF and World Bank officials prior to signing the bailout deal.
Officials from the finance ministry said the bailout package is expected to be between $6 billion to $8 billion in value. Najeeb, however, said that the loan amount would be finalized during the visit by the IMF’s representatives.
This will be the country’s 13th loan program since the late 1980s, even though the government claims that this will be the last one that will be taken to support the economy. Thus far, Islamabad has managed to successfully complete only one IMF program which ended in 2016, which means that it received all the disbursements as planned.
Pakistan has sought loans and financial aid from several of its allies – including Saudi Arabia, United Arab Emirates and China – to reservice the debt and shore up its economy. The external account pressure reduced the country’s international reserves to $6.6 billion by mid-January 2019, but with short-term financing from Saudi Arabia, the UAE and China, foreign reserves increased to $10.27 billion by April 11.
Last week, the IMF warned that Pakistan’s growth would fall to 2.9 percent and 2.8 percent during the current and next fiscal years unless the country implemented an IMF-recommended reforms' program.
Muzamil Aslam, a senior economist and former CEO of EFG-Hermes Pakistan, said that the IMF deal would end uncertainty in the country’s capital market and stabilize the economy.
“The government should focus on long overdue structural reforms to put the economy back on the track, ensure a financial discipline for a comfortable future, and boost economic growth,” he told Arab News.