We don't have enough to pay loans, decided to approach IMF and friendly countries: Imran Khan

File photo of Imran Khan. Photograph:( Reuters )

Reuters Islamabad, Pakistan Oct 11, 2018, 07.32 AM (IST)

Pakistan will go to the International Monetary Fund and friendly countries for financial help to avert a looming balance of payments crisis, Prime Minister Imran Khan said on Wednesday.

His comments suggest the government will approach both Saudi Arabia and China for loans alongside any assistance provided by the IMF. Beijing and Riyadh have provided Pakistan with financial assistance in the past.

Khan said the current account deficit was about $18 billion. "We do not have enough dollars to pay the instalments of our loans," he said in a speech. "We debated and decided to go both the IMF and countries which are our friends."

Khan, who took office in July, has been seeking alternatives to a second IMF bailout in five years - which would be likely to impose tough conditions on government policy, limiting his vision of an Islamic welfare state - but decided on Monday to open talks with the international lending body.

Finance Minister Asad Umar is due to meet officials at this week's annual conference of the IMF and the World Bank in Bali, Indonesia, to discuss a potential package.

Pakistan's foreign reserves dropped by $627 million in late September to $8.4 billion, barely enough to cover sovereign debt payments due through the end of the year.

On Tuesday, the Pakistani rupee plunged 7 per cent in an apparent central bank devaluation, the country's fifth devaluation since December. This took total rupee losses since then to about 26 per cent, a level seen as a prerequisite for another IMF rescue package.

In his first official state visit, Khan and Umar flew to Saudi Arabia and the government later announced Riyadh would be investing in Chinese-funded development projects.

Beijing has pledged $60 billion to build infrastructure and energy projects to help turn Pakistan into a major overland route linking western China to the world.

Chinese Foreign Minister Wang Yi visited Islamabad last month when he met Khan and reiterated that Chinese investment would help revitalise Pakistan's economy.

Khan described ironically the $18 billion deficit as "a gift from the previous government".

"This is the biggest ever deficit of Pakistan's history," he said. "I want to tell all of you to stay strong and not to panic. This is  a very short period of time which will go away."

In the past, Khan had said going to the IMF for assistance and taking loans would be a last resort for his government.