Pakistan seeks IMF bailout to stave off economic collapse
Pakistan is holding last-ditch talks with the International Monetary Fund (IMF) to secure help to stem a deepening economic crisis that has all but emptied its foreign reserves.
Pakistani officials and a IMF delegation are holding tough negotiations this week in search of a deal by Thursday on loans to bail out the financially strapped country and avoid a default.
In order to break the deadlock, Pakistan's Finance Minister Ishaq Dar and IMF Mission Chief Nathan Porter met, away from the media glare and behind closed doors at the Prime minister House. The meeting venue was changed from the finance ministry to the PM House to avoid the media.
Despite the interaction, the Pakistan government could not convince the mission chief to share the draft of MEFP, which could have given it the real taste of what the IMF was thinking about the presentations made by Pakistani authorities over the past 9 days.
The meeting between the finance minister Ishaq Dar and the IMF mission chief 'was good and assurances (were) exchanged', according to a senior official. But no government official was sure that Pakistan would be able to get the MEFP today (Thursday) and sign it the same day. There was still a dim hope to get the document.
There was a huge external financing gap of at least 4 billion US dollar that has to be bridged by China, Saudi Arabia and the United Arab Emirates (UAE) in the shape of additional support by June, according to highly placed government sources.
These countries were looking towards the IMF and the lender was asking Pakistan to take them onboard.
The IMF programme has to remain funded and still there is no convincing plan that could ensure at least 7 billion dollar for debt repayment, money for financing the current account deficit and increasing the low foreign exchange reserves to a decent level, according to a participant in negotiations with the IMF.
Pakistan has only 3.5 billion dollar in reserves but owes more than $9 billion in principal and interest payments in the next few months. Inflation has exceeded 25% in recent months and the country’s currency has plummeted to a historic low in value. Pakistan’s staggering 14.5 billion dollar debt in the energy sector is another contentious issue in the talks with the IMF.
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