Pakistan will not seek a new International Monetary Fund (IMF) loan programme or ask for an extension when its existing loan package ends on September 30, because it has no balance of payments crisis and has enough foreign exchange reserves, a Finance Ministry official said on Sunday.
Pakistan is due to meet the IMF officials during the World Bank and IMF annual meeting in Washington from September 23-25. “There is no immediate threat to the balance of payment and our foreign exchange reserves position is comfortable enough,” the official said, speaking on condition of anonymity.
“There is no crisis at hand that will call for an immediate action. But we will stay in close contact with the IMF,” he added. The official said Pakistan would ask the IMF to conduct an overview of its economy, known as an article IV consultation.
Pakistan has been struggling since 2008 to keep its economy afloat with an $11 billion IMF loan. Around $3 billion is left to be disbursed. The IMF has repeatedly urged Pakistan to expedite fiscal reforms. The official said the government would “continue to implement the fiscal reforms required for macroeconomic stability in the medium term” despite it no seeking the IMF support.
Pakistan’s current account deficit in the first two months of 2011-12 fiscal year narrowed to $189 million, compared with a deficit of $1.016 billion in the same period last year, due to an increase in exports and a rise in remittances from Pakistanis working abroad. Pakistan’s foreign exchange reserves stood at $17.79 billion in the week ending September 10 and had hit a record $18.31 billion in the week ending July 10, but have eased due to scheduled debt payments.
The IMF loan repayments are also due to start from early next year. Analysts said that Pakistan –facing multiple challenges from a Taliban insurgency to crippling power cuts – will eventually need to turn to the IMF for another loan programme.
“Eventually the balance of payments pressure will build up and we can perhaps stretch being without a programme for a few more months but with the repayments and lack of funding from multilaterals, it will become increasingly difficult to be without an IMF programme,” said Invisor Securities Ltd Director Asif Qureshi.
