Cash-strapped Pakistan set to sign $6 -8 billion bailout deal with IMF
Islamabad: Pakistan and the IMF are set to sign a USD 6-8 billion bailout package, Finance Minister Asad Umar has announced, as the cash-strapped country tries to wriggle out from a severe balance-of-payments crisis that threatens to cripple its economy.
He said the International Monetary Fund package would ease off pressure from the country's dwindling foreign reserves.
"We have reached an agreement and all the major issues have been settled and documented," Umar told a meeting of the National Assembly's Standing Committee on Finance and Revenue on Monday after a visit to the US. External account pressure reduced Pakistan's international reserves to USD 6.6 billion by mid-January 2019, but with short-term financing from Saudi Arabia, the United Arab Emirates and China, foreign reserves increased to USD 10.5 billion at the end of March.
Umar said that an IMF mission will visit Islamabad during the last week of April, which is when the bailout package amount will be finalised, Pakistani media reported.
The finance minister later told journalists that the bailout package with the IMF had been "agreed upon in writing and we have an agreement on all policy matters." These matters included exchange rate, fiscal deficit, energy, public finance and public sector entities, he said. Umar said the exact size of the fund programme had not be concluded, adding that it would be between USD 6 billion and USD 8 billion.
He said major flows would then come from the World Bank and the Asian Development Bank (ADB) that had been blocked in the pipeline owing to insufficient import cover and the absence of IMF umbrella.
He said Pakistan's financing gap was around USD 15 billion while USD 7-8 billion from the World Bank, USD 6-8 billion from the IMF and ADB would be available while the process for launch of international bonds had already been started.