In a major development, Pakistan has declined a new bailout package offer by the International Monetary Fund (IMF), saying the country had sufficient foreign exchange reserves to pay off its debt and meet import requirements for the next six months. An informed source told Pakistan Today that the offer was declined by the government team during ongoing parleys with the IMF team under article four consultations in Dubai, the United Arab Emirates. The weeklong consultations that started on November 9 covered the technical aspects until November 14, while the policy-level dialogue continues until November 17.
During the policy-level talks, the source said Pakistan’s finance team would try to convince the IMF team on its macroeconomic framework. “If they succeed, the IMF will issue a letter of support, expressing satisfaction over the macroeconomic framework, to other international financial institutions. This will allow Pakistan to get financial assistance of $2 billion in programme loans, a kind of budgetary support, from the World Bank and the Asian Development Bank,” he said. However, if the IMF is not satisfied, Pakistan would be in a difficult situation as it is scheduled to pay $1.2 billion in two separate installments in coming February and June to the IMF.
It will also halt the release of $1 billion each budgetary support from the WB and ADB, respectively. Of the $11.3 billion standby arrangement facility, Pakistan received only five tranches worth $7.6 billion from the IMF. During the technical-level talks, Pakistani team was confident to sustain the pressure about the current account deficit without any IMF programme, as growth in exports and remittances would help counter the pressure, the source said.
