Govt rules out approaching IMF for another bailout package

ISLAMABAD: Ruling out the possibility for making any formal request to the IMF for another bailout package, Pakistan will raise gross borrowings of $10.6 billion in shape of short term commercial borrowings, getting disbursements of loans from multilateral and bilateral creditors as well as possibility of tapping the Eurobond up to June 30, 2018.

“No possibility,” Prime Minister’s Adviser on Finance Miftah Ismail replied on Thursday when asked about any possibility for making formal request to the IMF for new bailout package on the eve of upcoming annual spring meetings of Breton Wood Institutions (BWIs) scheduled to be held at Washington DC in the third week of next month.

The BWIs such as the IMF/World Bank are scheduled to hold upcoming annual spring meetings from April 20 to 22 at Washington DC in which Pakistan’s delegation headed by Miftah Ismail will participate along with Governor State Bank of Pakistan (SBP) Tariq Bajwa and other high-level officials of the Finance Ministry.

The spring meetings of the Boards of Governors of the International Monetary Fund (IMF) and the World Bank Group (WBG) bring together central bankers, ministers of finance and development, parliamentarians, private sector executives, representatives from civil society organisations and academics to discuss issues of global concern, including the world economic outlook, poverty eradication, economic development, and aid effectiveness. Also featured are seminars, regional briefings, press conferences, and many other events focused on the global economy, international development, and the world's financial system. This year's events will take place in Washington, DC, April 16-22, 2018.

However, official sources confirmed to The News here on Thursday that the government made plans to raise $10.6 billion gross financing during the last quarter (April-June) period of the current fiscal year. “The government has decided to raise $3.5 billion through short term commercial borrowings out of which $1 to $1.5 billion will be generated through Chinese banks next month. The remaining $2 billion will be raised in May and June 2018,” official sources said and added that Islamabad had already raised $1.77 billion through short term commercial borrowings in first eight months (July-Feb) period of the current fiscal year 2017-18.

The official sources said that Finance Ministry and Economic Affairs Division (EAD) worked out details of getting disbursements of project loans to the tune of $4 to $5 billion from all multilateral and bilateral creditors in the remaining period of the current fiscal year. It seems difficult to materialise but the economic managers are confident that they can deliver on this front.

Now the tapping of Eurobond is still on the table but the government will take final decision on this front, by end April or May 2018 keeping in view the appetite of international bond market. “We can complete this transaction after issuing notice of one week,” said one official and added that it would depend upon the advice of our financial advisers for going back into international market but the rate on bond should not be more than the last transaction which was done at 6.87 percent rate in November 2017.

In first eight months (July-Feb) period of the current fiscal year, Islamabad has obtained $7.608 billion in shape of disbursements from all bilateral and multilateral creditors. Against the budgetary estimates of $8.094 billion in 2017-18, the government received $7.6 billion as ADB provided $546 million, Asian Infrastructure Investment Bank (AIIB) $17.01 million, Canada $0.16 million, China $1.129 billion, Islamic Development Bank (short term) $873 million, Japan $73 million, Multi Donor Trust Fund $38 million, WB’s IBRD $220 million, IDA $55.72 million, Saudi Arabia $40.74 million, UK $134 million as grant, USA $42 million grant, international bonds $2.5 billion and short term commercial loans $1.77 billion in the current fiscal year.