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December 16, 2018

IMF ties Pakistan’s debt transparency to bailout deal


December 16, 2018

KARACHI: Pakistan’s debt transparency is an utmost prerequisite for a possible bailout package from the International Monetary Fund (IMF), a spokesperson of the Washington-based lender said, adding the talks with the country continue to reach understanding on the economic policy priorities.

IMF Communications Department Director Gerry Rice said discussions with Pakistan are active and “they continue toward reaching an understanding on the policy priorities and reform to stabilise the economy, lay the foundations for sustainable, inclusive growth”.

Rice was addressing a presser on Thursday, according to a transcription made available on the IMF’s website on Saturday.

“When a program is agreed by staff with the authorities, it goes forward to the board. And the board representing our membership, including the United States, of course, makes the final decision on whether that program should go ahead,” he said, responding to a question whether or not IMF considers the US insistence that any of IMF loan to Pakistan should not be used to repay the country’s debt to China.

China has pledged more than $50 billion of financing for infrastructure developments in Pakistan under its belt and road initiative aimed at improving regional connectivity.

Ratings agency Fitch said Pakistan’s external debt servicing will stay high throughout the next decade, with China Pakistan Economic Corridor-related outflows set to begin in the early 2020s.

The IMF’s director said debt sustainability in a country's debt profile is “one of the priority issues that the IMF looks at in the context of a program discussion with a member”.

“That definitely will be the case in the case of Pakistan,” he added.

IMF staff team was engaged with Pakistan till November to discuss a financial support to the country’s ailing balance of payment position. The next board meeting is scheduled for January 15.

The talks have been elongated with Pakistan having been pledged with six billion dollars of financial assistance from Saudi Arab. The country’s official reserves also moved towards recovery as two billion dollars have already been received from Saudi Arab.

Government said it has brought down the external financing requirement to seven billion dollars from earlier estimated $12 billion for the current fiscal year.

Rice further said debt transparency is essential to conduct proper analysis of the sustainability of a country’s debt.

“That is what the IMF does when we are going into a program with our member countries. So that will be the case in Pakistan,” he added. “One of the things that we do in every program is to have a very detailed debt sustainability analysis to ensure that indeed the country’s debt profile is sustainable.”

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