International Monetary Fund (IMF) Managing Director Christine Lagarde on Thursday confirmed that Pakistan has formally requested financial assistance from the fund to address its economic challenges.
Lagarde said in a statement that the request came during her meeting with Finance Minister Asad Umar and State Bank Governor Tariq Bajwa on the sidelines of the IMF and World Bank annual meetings in Bali.
"An IMF team will visit Islamabad in the coming weeks to initiate discussions for a possible IMF-supported economic programme," Lagarde said. "We look forward to our continuing partnership."
Pakistan began exploring the possibility of yet another loan package with the IMF while the PML-N was still in power and the exploratory talks continued under the interim government as well.
Prime Minister Imran Khan's new administration took office in August vowing to weigh up whether to seek an IMF bailout as it sought other avenues of financing.
He has sought loans from friendly countries, promised to recover funds stolen by corrupt officials, and embarked on a series of populist austerity measures. But help has been in short supply and economists' warnings have grown increasingly urgent.
The final decision, however, was announced on Monday night when Asad Umar confirmed that the government would seek talks with the IMF on a "stabilisation recovery programme".
The announcement followed the substantial single-day loss in the stock market, which plunged by over 1,300 points, losing almost Rs270bn of its capitalisation.
On Tuesday, the IMF said that it would listen to Pakistan’s request for financial support "very, very attentively", as it did with any member with good standing.
Pakistan seeks largest bailout yet
Pakistan is seeking its largest loan package of up to $8 billion from the IMF to bail itself out from a severe crisis that threatens to cripple its economy, diplomatic sources earlier told Dawn.
The sources said that the IMF could place strict conditionalities, forcing Pakistan to seek additional loans for meeting those restrictions and this could expand the loan facility to $12bn.
Pakistan has received more than a dozen financial support packages from the IMF in the past. It completed the last three-year package of $6.4bn in August 2016, which was 216 per cent of Pakistan’s quota at the IMF.
The previous programme also aimed at “bringing down inflation and reducing the fiscal deficit to more sustainable levels”. It included measures to “help achieve higher and more inclusive growth, in particular through addressing bottlenecks in the energy sector”.
At a news briefing on Tuesday, IMF chief economist Maurice Obstfeld outlined the economic challenges that Pakistan was facing now and also commented on its ability to finance itself.
Asked how would the IMF react to Pakistan’s request for an emergency bailout package, he said: "As with any member in good standing, they are certainly entitled to request financial support from the Fund. So, we will be listening very, very attentively when and if they come to us."
He noted that Pakistan has "frequently… had programmes in the past several times… and that is a very good sign going forward".