Khan mulls asking IMF for bail out

9 Oct 18

Pakistan’s prime minister has said he may go to the International Monetary Fund for a bailout loan if other governments do not step in to help his country.

This comes after the IMF said in a statement last week that the Asian country is facing “significant economic challenges”, with declining growth and high deficits, and warned that external financing is needed to stabilise the economy.

Imran Khan, who took office in August, blamed the economic situation on the previous government and repeated a promise to recover billions of dollars from corruption.

“We may go to the IMF for a loan to handle the country’s financial issues,” the premier told the press after chairing a meeting of the provincial cabinet in Lahore on Sunday.

“But, first we will try to get assistance from other countries as we have requested three countries to deposit money in Pakistan’s State Bank that would boost national reserves.”

He did not name the countries or give any further details of the requests.

The prime minister has been reluctant to ask the IMF for emergency loans that would be the country’s second bailout in five years.

An IMF bailout is likely to include conditions that will curb government spending, which could threaten Khan’s campaign promise to build a stronger economy. 

The IMF statement, released last week, said that recent policy measures, such as proposed increases in electricity tariffs and a budget supplement proposed by the finance minister, are “steps in the right direction” but are “not yet sufficient”.

But it warned that “decisive policy action and significant external financing will be needed to stabilise the economy”.

It added in the long-term, there should be more focus on modernising the tax system, public financial management and governance.

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