New deal with IMF on the cards for Pakistan

ISLAMABAD: Prime Minister Shehbaz Sharif has informed the International Monetary Fund (IMF) Managing Director Kristalina Georgieva about Pakistan’s intention to secure a new bailout.

Moreover, Minister of State for Finance and Revenue Dr Aisha Ghaus Pasha on Wednesday criticised IMF mission chief Nathan Porter’s comment on the country’s political situation, saying he should not “interfere in politically domestic” matters.

According to media reports, the prime minister had revealed Pakistan’s intentions to sign a follow-up bailout package during his telephonic conversation with the IMF managing director on the weekend.

Pakistan’s current $6.5 billion programme stood derailed and the efforts being made to revive it for the past seven months could not materialize. The programme is going to expire on June 30.

The sources said that the IMF chief reciprocated the premier’s views about the need for another package. Diplomatic corps and international financial institutions think that Pakistan cannot avoid default without securing a new IMF package.

In order to repay $25 billion debt in the next fiscal year, Pakistan has to have an IMF umbrella. The Ministry of Finance is also of the view that the follow-up programme is needed to reinforce and build upon the reforms initiated during the current programme, a senior official of the ministry said on the condition of anonymity.

However, the prime minister’s latest initiative seeking a new deal runs counter to Finance Minister Ishaq Dar’s stance who, not long ago, had propagated the idea that Pakistan should stop living off the IMF. But, there a few members of the economic team think that the IMF programme is a necessity at this point in time.

The sources said that the IMF managing director emphasised that Pakistan should immediately fulfill the outstanding conditions particularly arranging foreign loans and leaving the exchange rate on market forces by ending administrative controls.

Nathan Porter, the IMF’s mission chief to Pakistan, also reiterated the views in a statement in which he emphasised that Pakistan should present the next fiscal year’s budget in line with the IMF framework and also give clarity on the exchange rate policy.

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