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Pakistan Begins Talks With IMF On Three-Year Bailout Package

Chinese President Xi Jinping (right) shakes hands with Pakistani Prime Minister Imran Khan in Beijing on November 2.
Chinese President Xi Jinping (right) shakes hands with Pakistani Prime Minister Imran Khan in Beijing on November 2.

Pakistan has begun talks with the International Monetary Fund (IMF) on a possible bailout package to help the country overcome a deepening economic crisis.

Finance Ministry spokesman Noor Ahmad said on November 7 that Pakistan expected to receive a three-year assistance package from the international lender of last resort.

The talks on what would be the 13th IMF bailout package since the 1980s are scheduled to finish on November 20. Islamabad last received an IMF bailout of $6.6 billion in 2013.

Hours ahead of the IMF delegation's arrival in Islamabad, Finance Minister Asad Umar announced that an immediate balance of payment crisis has been averted with the help of China and Saudi Arabia.

Pakistan was facing a $12 billion financing gap for the current fiscal year. Umar told a press conference late on November 6 that Saudi Arabia had already committed $6 billion and another $6 billion would come from China.

Last month, Saudi Arabia announced it would lend $3 billion to Pakistan's central bank for a year to help maintain reserves at a safe level, and provide another $3 billion through deferred payments on oil purchases.

Chinese leaders pledged to help Pakistan during Prime Minister Imran Khan's visit to Beijing last week. Details of the Chinese assistance are still under negotiation.

Umar said Pakistan's finance secretary and central bank governor will travel to Beijing on November 9 to finalize terms of the assistance.

Khan's government has sought to minimize the amount borrowed from the IMF by getting loans from "friendly" countries.

The conditions the IMF typically attaches to its loans include such unpopular measures as devaluing the country's currency, balancing the budget with spending cuts and tax increases, and curbing imports to tame the trade deficit.

Pakistani officials are concerned tough IMF conditions would hit economic growth in the short term and prevent Khan from fulfilling populist campaign pledges.

Khan's government has pledged to create an "Islamic welfare state" and help build 5 million homes for the poor.

Pakistan's current account deficit widened by 43 percent to $18 billion in the last fiscal year and its budget deficit has ballooned to 6.6 percent of economic output, creating a financial crunch that economists say will require IMF intervention to overcome.

With reporting by dpa, AFP, and Reuters
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