Government set to approach IMF for $8 to 10 bn package

ISLAMABAD: After weeks of dithering, Pakistan has decided to approach the International Monetary Fund (IMF) for $8 to 10 billion programme to overcome the acute financial problems and improve its credibility at the international level.

The News has learnt that Prime Minister Imran Khan has already been briefed about the country’s financial condition ahead of the decision. However, Finance Minister Asad Umer is still reluctant to concede it.

“No decision yet! Will be taken soon,” Asad Umar told this reporter tersely when approached. While Asad still takes time to make the announcement, it has been learnt that he, along with his team, had briefed the prime minister on the country’s financial position and presented a plan to approach the IMF for a package the ministry is reluctant to call a “bailout”.

It has also been learnt that the proposed IMF package is sought to give the economy the much-needed relief, especially in terms of shoring up the country’s fast depleting foreign reserves.

The package would also serve to improve Pakistan’s credibility in the eyes of international financial institutions, particularly the World Bank and Asian Development Bank, to consider the country’s economy potentially capable of handling its financial woes, the premier was reported to have been informed.

Sources in the Finance and Economic Affairs Division said the prime minister was convinced after the briefing that the main reason to approach the IMF was that it will improve the balance of payments, timely payments to meet international obligations, bring discipline in financial matters and improve Pakistan credibility at the international level.

It was also learnt that the team, headed by the finance minister, believes that engaging with the IMF was a requirement to portray Pakistan’s image as a serious country trying to keep the house in order on financial issue and economic side.

When you are engaged with the IMF, the international financial institutions start to take you seriously, said a senior bureaucrat working with the economic team of the country while talking to The News.

It was also learnt that after taking the decision to approach the IMF, the government was working for the timing to submit a proper request for a package, which had to be submitted in this calendar year.

Knowledgeable sources in the finance ministry informed this reporter that the IMF was more than willing to accept Pakistan’s request for a fresh programme but the government was reluctant to announce the decision to approach it in the first 100 days, said a senior retired bureaucrat working with Imran Khan led-PTI government.

The News also learnt that in the next two months Pakistan will work out a proposal made by the recently visiting delegation of the IMF under Article 6. The IMF team last week concluded Pakistan’s tour for post-programme review of the economy.

The team has proposed taking decision on the Pakistani Rupee, reforms in different departments especially in the FBR and to handle state-owned entities running into losses and eating up at least Rs300 billion annually.

These sources made it clear that the decision to go for the IMF programme had no link with the negotiations held last week with the IMF. The staff level negotiations took place under Article 4, which is called the post-programme talks, clarified these sources.

The following are the articles of agreement of the IMF.

Article VI: Capital Transfers

1. Use of the Fund's general resources for capital transfers

2. Special provisions for capital transfers

3. Controls of capital transfers.