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April 27, 2019

Pakistan to pay back $3 bn to IMF over next three years

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April 27, 2019

ISLAMABAD: Pakistan will have to pay back around $3 billion to the IMF over next three years starting from upcoming financial year 2019-20 so with possible size of $6 billion bailout package, half of the amount will go back to the Fund on account of previous outstanding loans and liabilities, The News has learnt.

Now Pakistan and the IMF have formally confirmed kick-starting parleys here from next week to make efforts for striking a staff level agreement. “Pakistan’s net financing requirement has been estimated at over $8 to $10 billion in next fiscal year so Islamabad will have to heavily rely upon traditional lenders such as WB, ADB and others as well as international capital market to generate funding even after entering into IMF programme,” official sources told The News. The IMF programme helps countries build story on economic front to lure international investors to generate funding.

“Pakistan will have to pay back $800 million to IMF in 2019-20, $1 billion in 2020-21 and another $1 billion in 2021-22,” a top official said. In the aftermath of meeting held between IMF Managing Director Christine Lagarde and Prime Minister Imran Khan in Beijing on the sidelines of Belt and Road Forum (BRF), IMF on Friday confirmed that its mission would be visiting Islamabad from coming Monday (April 29) for holding parleys on fresh bailout package.

The possible size of the upcoming bailout package will be worked out at slightly over $6 billion under three year Extended Fund Facility (EFF). The IMF mission is expected to stay in Islamabad for almost 10 days.

“The IMF team will reach out Pakistan shortly to start technical discussions on April 29,” IMF Resident Chief in Pakistan Teresa Daban Sanchez told The News Friday.

On the other side, the Ministry of Finance spokesman Dr Khaqan Najeeb in a message stated that the IMF team would visit Pakistan starting from April 29 to continue technical discussions for an IMF-supported programme.

He said extensive preparation for data and macroeconomic framework finalisation and structural reforms are ongoing. He said that Ministry of Finance held in-depth discussions with all key stakeholders including State Bank of Pakistan, Power and Gas Division, Privatisation Commission, Federal Board of Revenue and Benazir Income Support Programme (BISP) and others.

In case of striking staff-level agreement between IMF and Pakistani team on exact three year framework, conditions and size of the programme, the staff of the Fund will prepare its report for submission before its executive board.

The IMF board will meet after four to six weeks so Pakistan's bailout package is expected to get approval by end of June 2019. But it will be one of the programmes wrapped into toughest conditions and the economic team will have to get its act together to make it successful. Islamabad should not expect too much waivers even if it strikes agreement at initial stage of the programme.

The IMF’s MD after meeting with Imran Khan stated in her tweet: “I was glad to meet Prime Minister Khan of Pakistan today in Beijing. We discussed prospects for a comprehensive policy package and international financial support to help stabilise the economy of Pakistan, and also the need to strengthen governance and protect the poor.”

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