ADB rules out need for IMF’s bailout money

MANILA: Pakistan will probably not need bailout money from any international lender to tackle its deteriorating external account position as the country has options to raise funds from neighbouring China or from international capital market, a senior official at the Asian Development Bank (ADB) said on Thursday.

“I don’t think current situation needs any bailout… Pakistan economy is not going towards a wrong direction at the moment,” Werner Liepach, director general of ADB’s central and west Asia department, said at a media briefing.

Local analysts view the recent devaluation of rupee, as a pre-condition to qualify for any fresh International Monetary Fund’s (IMF) bailout package, was needed to avoid a crisis-like situation.

Since December last, rupee weakened almost 10 percent against the dollar. A surge in imports has widened the current account deficit and prompted analysts to suggest the country may need an IMF bailout.

The IMF, which last provided a bailout package to Pakistan in 2013, said in March that Pakistan’s short term outlook was “broadly favourable” while also warning that “continued erosion of macroeconomic resilience could put this outlook at risk”.

Finance Minister Miftah Ismail also said the government had no intention of getting any bailout package from

IMF and “efforts are being made to avoid the same,” he remarked.

Liepach said falling exports are a bit of concern for Pakistan’s policymakers,

but “lately exports are also picking up, remittances are good”.

“Pakistan has ways to finance the current situation, it has option to borrow funds from capital market, or from China so no need for panic right now.”

Liepach, who also served as country director Pakistan from 2011-2017, said the upcoming general elections in Pakistan will not derail economic reforms program and the growth agenda.

“Economic policies of major political parties are more or less the same, they all want economic stability, growth.”

He said pre-election uncertainty is there but “the government won’t be distracted from its economic reform program”.

“Businesses hate uncertainty and it’s true that elections bring uncertainty but in Pakistan's case the country is better placed politically,” Liepach said.

“It’s the second political government which is completing its five years term and I don’t see any change in

economic policy whichever party forms the government next… CPEC will get the same priority form any party in power.”

Liepach said the ADB sees Pakistan funding need from the bank up to $7 billion in the next three years.

“ADB has been one of Pakistan’s largest development partners, providing $2.2 billion annually and for the next three years I see a total of $6 to $7 billion funding for Pakistan,” he added.