Talks begin to determine if Pakistan will seek IMF bailout

ISLAMABAD: Pakistan and the International Monetary Fund (IMF) team will have to assess the gross financing requirements for the ongoing fiscal year 2018-19 before Islamabad can decide whether or not to apply for the balance of payments bailout programme, The News has learnt.

The visiting IMF staff team, which arrived here yesterday, led by Herald Finger, kick-started negotiations with Pakistan’s economic team. It would remain in Islamabad until the end of next week. The federal government and the IMF team would review all issues pertaining to the Pakistani economy, including the mini-budget unveiled by the government to contain the budget and current account deficits. Estimates for both figures would be worked out by the two sides to evolve a consensus.

“The Ministry of Finance has assessed that the gross financing requirement of the country would range between $26-$29 billion during the current fiscal year, but the IMF team would give its assessment after gauging the economic health of the country during the Article IV consultations,” a top official of the government told The News.

The official said that the monthly current account deficit peaked at $2.2 billion in July, but contracted to $600 million in August. The assessment of gross financing requirement could not be ascertained on the basis of figures for a couple of months, he said.

Once quantified, Islamabad would be in a position to decide whether it needs to apply for an IMF programme or can manage the economy without its assistance. The IMF team would prepare a report on the basis of the Article IV consultations with Pakistan for presentation to the Executive Board of the IMF and subsequent publication.

“The government would have to take a formal decision on approaching the International Monetary Fund within one-and-a-half months,” the official said. Depending on the outcome of the talks, it would be determined who from among the Minister for Finance Asad Umar, Secretary Finance Arif Ahmed Khan and State Bank of Pakistan Governor Tariq Bajwa would attend the annual meetings of the IMF and World Bank in Bali, Indonesia from October 8-14, for further talks.