KARACHI: Pakistan and the International Monetary Fund (IMF) have not decided any timeline related to a loan program, IMF’s spokesman said, indicating a further delay of a bailout deal carrying structural reforms much needed to rejuvenate the country’s fragile economy.
“We expect a mission to Pakistan shortly for further discussions, but I can’t put a date on when they would conclude or when we would be in a position to announce agreement,” IMF’s Communications Department Director Gerry Rice said, addressing a media briefing. “All I can tell you is that the discussions have been ongoing at various levels….,” Rice said answered question in a statement. “There’s a process, you know, staff visits, negotiating missions, and then we would come to it.”
Government, in the mid of last year, decided to approach the Washington-based lender to obtain financing to bridge current account deficit that widened to $19 billion in the last fiscal year. Rupee lost more than a quarter over the last one year due to depleting foreign exchange reserves. Analysts said it is first time that the conclusion is taking so long as the country is looking for an IMF’s loan program for the 13th time.
“IMF previously was demanding of ‘hard landing’, but now it has agreed on ‘soft landing’,” Zeeshan Afzal, an economist at brokerage Insight Securities said. “Pakistan has succeeded in bringing the Fund on its terms of gradual implementation of reforms.”
Privatization of loss-making public sector enterprises and measures to improve domestic business environment would be cornerstone of any possible loan program, analysts said.
IMF said the discussions are underway and it is “closely engaged in those discussions”.
“There have been a series of meetings … including Madame (IMF Managing Director Christine Lagarde) having met with the Prime Minister of Pakistan (Imran Khan) fairly recently,” Rice said. “So, those discussions are continuing and I believe that there will be a mission to Pakistan shortly, though I do not have the exact date on that.”
In early February, Khan met with Lagarde on the sidelines of 7th edition of the World Government Summit in Dubai.
IMF’s director didn’t share the amount which IMF is looking at giving financial assistance to Pakistan. “I don’t have a number in mind. That’s something that will be discussed in the context of the consultations with the authorities,” Rice said. Fitch Solutions, a research arm of global ratings agency Fitch, expected the loan size at $12 billion. The government managed to curtail current account deficit by 23 percent to $8.8 billion in the first eight months of the current fiscal year, easing pressure on foreign exchange reserves. It is expected to receive more than two billion dollars from China by the end of the current month, which is in addition to five billion dollars received from Saudi Arab and UAE.