Pakistan turns to IMF for economic rescue package

12 Oct 18

Pakistan has appealed to the International Monetary Fund for a bailout package to help it out of economic turmoil.

Last week, Pakistan prime minister Imran Khan said that he would go to the international lender if he could not get financial assistance from other countries.

Yesterday, IMF managing director Christine Lagarde confirmed that Pakistan’s finance minister Asad Umar and the governor of the State Bank of Pakistan Tariq Bajwa had asked for help.

She said: “During the meeting, [Umar and Bajwa] requested financial assistance from the IMF to help address Pakistan’s economic challenges.”

An IMF team will go to the Pakistan capital Islamabad in the coming weeks to begin talks about a possible IMF-supported economic programme, Lagarde added.

The South Asian country is facing “significant economic challenges”, according to the IMF, with declining growth and high deficits. The fund warned last week that external financing was needed to stabilise the economy.

But Tim Jones, economist at the Jubilee Debt Campaign, said Pakistan had been reliant on IMF financing for 33 of the last 46 years and it was “time to try something different”

“IMF loans to pay off previous lenders combined with austerity is a recipe for failure, as the last 46 years have proven. A debt restructuring is needed across all Pakistan’s creditors, to finally give the country a new start,” he said.

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.

He has been reluctant to ask the IMF for emergency loans, which would be the country’s second bailout in five years.

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

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