ISLAMABAD – The government has decided to seek another bailout package from the International Monetary Fund (IMF), at least for the repayment duration of the suspended $11.3 billion programme, of which a repayment of $7.1 billon would begin from September next year.
An official source said Finance Minister Dr Abdul Hafeez Shaikh would inform the IMF about the intention during his visit to Washington between April 11 to 17 to attend the spring meetings of the World Bank and IMF. The source said the government had decided to scrap the suspended $11.3 billion standby arrangement programme with IMF and seek a new bailout package during the loan repayment period.
The decision was made as the repayment of IMF loan is to start from September next year. The repayment will likely increase pressure on the exchange rate and lead to a reversal of the economic stabilisation process. The source said the size of the programme was not finalised as yet, but the government considered that any programme between $3 billion to $5 billion would be enough for smooth sailing.
The government would assure the IMF that it would continue implementing the agreed to economic reforms. “IMF is very concerned about the rising fiscal deficit and it wants the government to maintain it below five percent of the GDP for any future support,” the source added. The new programme would require new benchmarks, he said, adding that the government considered that it would implement them this time as achievement of previously agreed benchmarks became difficult due to floods and suspension of foreign aid.
The IMF was well aware of the government’s difficulties to put in place economic reforms. The most crucial issue of implementation of RGST would be resolved by next fiscal, as political parties and provinces have agreed to approve its implementation with the next year’s budget. “Pakistan is seeking continuation of the IMF programme as it also helps attract foreign inflows from other bilateral and multilateral development partners,” the source said.
During his Washington visit, the finance minister would meet US authorities to sort out the differences over the arrears of the coalition support fund. The sources said the finance minister would be seeking market access, especially from the G-1O countries, as the spring meetings of the World Bank and IMF are attended by leaders of developed nations.
Pakistan would also be seeking an early implementation of the EU trade concessions.
