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IMF team to visit Pakistan this month in final bailout push

File photo of IMF. Photograph:( Reuters )

Reuters Islamabad, Pakistan Apr 15, 2019, 06.05 PM (IST)

A mission team from the International Monetary Fund (IMF) will travel to Pakistan this month, the IMF said on Monday, amid growing expectation that talks on a long-delayed bailout are due to be wrapped up soon.

Pakistan was last year expected to sign up for its 13th IMF bailout programme since the late 1980s but talks ground to a halt, with Pakistani officials saying the conditions attached to the proposed IMF loans could hurt economic growth.

Pakistan's macroeconomic outlook has deteriorated in recent months, with the central bank lowering growth forecasts and raising rates at a time when inflation is at a five-year high. The rupee currency has also lost about 35 per cent since December 2017.

"At the request of the authorities, an IMF mission will be going to Pakistan before the end of April to continue the discussions," the IMF said in a statement.

Pakistani Finance Minister Asad Umar earlier this month visited Washington for talks with the IMF, which on Monday described those talks as "constructive discussions".

The government of Prime Minister Imran Khan, who took power in August, has obtained temporary relief from close allies such as China and Saudi Arabia with short-term loans worth more than $10 billion to buffer foreign currency reserves and ease pressures on the country's current account.

But analysts have been saying an IMF bailout is inevitable, with Pakistan also facing an increasing fiscal crunch ahead of the annual budget spending review for the next financial year starting July 1.

"After today's IMF statement, the expectation is that the bailout is pretty much there," said Saad Hashemy, Chief Economist for Pakistani brokerage house Topline Securities.

But he added that there are questions regarding the time frame of when Pakistan would start receiving the money and the exact contours of the assistance programme.

"There are questions if there will be any further devaluations, how much interest rates will be hiked, what taxation measures are expected of Pakistan, and will there be any further increase in electricity or gas prices?" Hashemy added.

Khan's government is facing increasing anger from the population on the back of rising utility prices, many of which have been subsidized by successive cash-strapped governments.

Inflation was over 9.4 per cent in March, its highest since November 2013, with strong increases in food and energy, the two most sensitive items for most consumers.

The central bank forecasts growth at 3.5 to 4 per cent in the 12 months to end-June, well off a government target of 6.2 per cent.

Story highlights

'At the request of the authorities, an IMF mission will be going to Pakistan before the end of April to continue the discussions,' the IMF said in a statement.