Pakistan would not avail IMF bailout package
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LAHORE: Prime Minister Shahid Khaqan Abbasi and State Bank of Pakistan (SBP) firmly believe Pakistan can face twin challenges of widening external deficits and declining foreign exchange reserves.
In an interview to Bloomberg in August, PM Shahid Khaqan Abbasi had stressed Pakistan won’t be approaching IMF for another bailout and was considering introducing major tax reforms.
A text message sent to Bloomberg last week by PM Abbasi reiterated country’s debt repayments are being managed properly and there was no need for approaching the IMF.
Economic pundits and several media/print outlets have warned of Pakistan seeking another bailout package from the International Monetary Fund (IMF) since July due to deteriorating macroeconomic indicators.
World Bank in October forecast Pakistan’s external financing requirement at $17 billion for the current financial year, which is equivalent to 5pc or 6pc of gross domestic product.
Also adding pressure to the country’s economy are rising imports under China-Pakistan Economic Corridor (CPEC), which pushed current account deficit to more than double to touch $14.4 billion by end of September.
Gareth Leather, Senior Asia Economist at Capital Economic Ltd. In London said seeking a bailout from IMF at such a short notice, would be unwelcome considering elections are due to be held in Pakistan in August 2018.
He added IMF stays unpopular and government has options of either expending its foreign exchange reserves, allow the rupee to devalue or depreciate or seek financial likely from China.
Despite the strains, authorities have dismissed suggestions the country will request financial support from the International Monetary Fund or China.
Pakistan which is South Asia’s second largest economy has approached the IMF twelve times for loans since 1988.
