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Pakistan formally seeks financial assistance from IMF
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".
Comments (153) Closed
Why Pakistani delegation not meeting Chinese officials to seek expected bailout ?
At best IMF will give 3.5 to 4 Bn and send them back. Even IMF doesn't know whether this money will come back.
All th best Imran Khan.
Best PM we have ever seen. Win win situation - loan from IMF and China. PTI is the best party ever.
Are we prepared if request gets big NO! Daunting dollar eyes double century early.
@M. Emad Chinese,Saudi Arabia and UAE has already refused Pakistan any free aid.China will only give commercial loans.Saudi Arabia and UAE were ready to give free aid but they wanted Pakistan to participate in Yemen war which Pakistan refused.
Don't forget US.Pakistan is in very bad position and US will certainly take advantage of it.They will arm twist Pakistan the way they want.
Inshallah Imran will steer out Pakistan from this inherited crisis successfully..
Meetings are immaterial. Pakistan has yet to make formal request? The real demands of IMF will start thereafter.
I think this is where IK got it wrong. Good intentions are the best thing he can provide. But 100 days into office his priority should have been IMF. Firstly, It's surprising that they haven't yet approached IMF and the economy bleeds every day Secondly, they should have made sure that necessary steps are taken to ensure Pakistan doesn't fall into black list in fatf. Thirdly, military could have postponed the buying of drones from China right now. The ghauri missile tests etc cost a lot of money. Fourthly, where are the good economists who can steer . It was a shame that a good educated economist was asked to leave. Remember India came back from loans in 1991 after Manmohan Singh, an internationally renowned economist from Oxford University, steered it out with good policies. Fifth, shouldnt have put that tweet, "small man in big office". Modi did not even reply to that tweet. Work silently. Actions speak louder than words
@Chinpaksaddique Win-Win Situation Loan?
Like vast majority of people, I would also like to know: when all the looted tax payers money be recovered from corrupt mafia? Sooner we apply the Saudi model, it would be better and we will get out of our current financial mess crested by NS and his cronies, as there is no other way out. Recover the looted money quickly, before it is too late!
In this connected world there is no enemies and no permanent friends period.
@M. Emad Chinese, Saudi, UAE, are all good friends. Turkey and Iran are brotherly nations too but are in a economic situation themselves. IK will do best for country.
@Mian Why, so far pakistan paid all dues, so why not under PTI.
@M. Emad
"Saudi and Chinese terms of loan were much tougher than IMF," The minister has stated.
@Ashfaq "Are we prepared if request gets big NO!' Of course we are. Don't you remember what IK said: " If it was upon me, 50 people would already have been arrested". IMF can easily figure out who these 50 people might be. So IMF has to come up with a BIG NO, in either case.
@M. Emad China will not risk to play role of IMF
@Zakir Saudia already gave 10 billion dollars as gift during Nawas' regime
This may turn out to be a blessing in disguise. Now Pakistan's new government should start dictating its terms to both China and Saudi for not helping in this crucial time. I can see that the game will be changing soon in favour of Pakistan. No more give away deals with anyone!!
@M. Emad Probably because Pakistan is trying to come out of Chinese loans.
Gov should long before seeked bailout package rather than exacerbating and exaggerating the issue.
IMF measn US..what else
shame on pti
@Zakir Then you still dont know Pakistan. Infact, its US who is changing approach, from ‘do more’ to ‘ what can we do for you’.
8 billion is not a big deal. Indian IT companies have annual revenue of 10 billion USD each. So, your priority should be to learn from your brother India and setup powerful engines to propel your economy. This could be fixed only when you drop your obsession about Kashmir, reduce tension with India, build solid education system, discourage extremism, fight with corruption, generate employment. Good luck!
Folks get ready for electricity gas petrol prices high rupee depreciation upto 150 per dollar and subsequently a gigantic flow of inflation I guess.
IMF will soon make the entry of ‘Bad Debts’ in their accounts.
Intresting fact is China has more than 3000 billion dollars in its Forex. 10 billion dollar is nothing for it...
Nawaz sharif and Zardari ought to be held accountable for economic treason.
@M. Emad - We have enough debts from the Chinese already
IK got ill advice from his own finance minister.
Pakistan is blessed to have a PM like Imran Khan. One of the Great if not the Greatest man alive on the Planet.
It is a shameful moment for PTI Government, which was highly critic of previous governments, for begging IMF and other international donors to function their governments. Today, PTI is also doing the same, with the same lame excuses that treasury was empty, when they ascended to the power.
This is such a big shame. After all the criticism of the previous Government going to the IMF they end up doing the same exact thing.
@Chinpaksaddique What is win-win situation you see here. Who is winning here? Only the creditors at their tough conditions. IMF will certainly ask to increase oil and gas prices for which ordinary people will suffer.
If we have money everybody become friends, if no everybody go away.
No govt in Pakistan can survive without IMF support. Ik must be scratching his head of promising not to beg for support with IMF.
Splendid work done. What an achievement !!! Kudos ! Bravo !! Keep repeating !! Not enough word found to cheer the achievement.
Imran Khan should now realise that passing judgements from the commentary box is very different from playing on the field.
Still time is there, improve your relationship with India. Friendship with China is just like being the cashier in the bank. You will have 70,80 billion dollars but that will not be yours. However the friendship with India will not give you so much. But you can have 10-25 billion dollars as your own. Think about it.
Member in good standing is someone who goes to IMF frequently for bail out. The economist calls Pakistan a member in good standing. That is a nice accolade to be proud of Or is it?
@M. Emad
Good question. Chinese are demanding interest on 'loans'. Also, other countries like KSA amd Turkey are not offering any help. So TINA factor induced them to go to IMF. But if you believe PM Khan, this is the last time they have approached IMF.
because PMLN and PPP we are in this position
@Real salaria Agree with everything. Also note Manmohan Singh a Sikh belonged to a minority community who are 2% of population. So a secular democratic country was able to elect him to the top post as PM later.
As I remember dollar was 60 to 70 in Musharraf era. Now one dollar equals 137 so more than double. Should we give credit to democrcy under NS and Zard for this??
@zak, "‘ what can we do for you"
Donald Trump is waiting for Pakistan's orders. Maybe you can sleep for some more time. Beautiful dream. Enjoy.
I doubt Pakistan will get the expected amount which comes to 8 billion US dollar as Pakistan is sitting under huge debt. The biggest problem is the bailout will not come soon as IMF is going to weigh all the options before releasing the amount also IMF will attach lots of harsh conditions which will be very difficult to fulfill.
Getting loan is very easy. Actual testing period will start once re-payment of loan is due.
Imf is a leech... Enslavement of poor Nations through debt must end.
Where is the all weather friend?
Asad sb u are proving to be useless!
@Zakir - "Saudi Arabia and UAE were ready to give free aid but they wanted Pakistan to participate in Yemen war which Pakistan refused."
Right-wing Indians love to make such stories up as they go along!
Every sensible person knows that what happened in the past 10 years and the reasons behind the current difficult times. Criticism on IK and his team has no substance except shallow remarks that why has he resorted to IMF when he had vowed he wouldn't. This is separate thing that IK shouldn't make such vows but this doesn't merit to hold him responsible for this. This is irony that most of the so called critics are not questioning the PMLN who kept the nation in the dark that they had revolutionized the economy driven growth. Wasn't that a mere sloganeering and empty rhetoric to persuade the electorate? Shouldn't we ask the former government to justify as what service have they done to us in the past five years that bailout was invertible. Is this justified to blame the current regime of only two months for the economic mess that happened in the last two regimes due to huge corruption, encouraging trading and ruining the manufacturing. We must think who is responsible?
Pakistan has to move very carefully, because its present economic crisis is deeply entangled with the international geopolitical games played around the CPEC project.
I am sure IK now knows who is the small man in the big office now? Or do we need to spell it out for him? I guess running a country is much harder than playing Cricket.
@Vishal Gaur "Actual testing period will start once re-payment of loan is due." For whom? What can they do if a country is no more able to repay? Almost nothing.
Five 5 years of CPEC.Time to stop importanting coal and redundant machines which are useless for beiging.
@Nahar01 Not necessarily! With little focus and insight, your country can take a turn for the best!
@J marfatia "But if you believe PM Khan, this is the last time they have approached IMF." He is right, IMF will certainly not entertain Pakistan again. This time they will have to collect Pakistan's money to give it back. As he said: "I'll bring back pakistan's plundered money". This is what he meant and they understand.
@Real salaria. Even for Manmohan, it took time. Be patient.
No body gives free money to any one particularly countries, always there is some thing behind. Hopefully this will be last loan from IMF. All local maufacturing has been destroyed by imported cheap stuff. Why we don't ban on imported stuff except high tech stuff
@Zakir There are no free lunches.
@M. Emad They did. There were conditions that were not in Pakistan's interests. Same with Saudi Arabia.
@BAXAR I think you don't know what happen with srilanka when they are not able to pay their loans
Asad Umar and Christine Lagarde's snap is something to be proud of for the entire nation. Hope my statement makes IK supporters happy!
@Vivek Why should they?
@Robert whose we? Maybe you can tell us with your crystal ball. Khan won a world cup with a team of youngsters, not sure what point you're trying to make.
Follow the model of Russian economy. They are not buying any US Treasury bills. Buy GOLD and Stock In Pakistan.
Modi should step in and make an offer that Pakistan cannot refuse...One time Payment of $8Bn and Pakistan should sign the dotted line
@M. Emad Chinese economy already in trouble. Thanks to Trump.
China is a great ally, and hence is a better bet; also improving trade with regional neighbors would be a great long-term strategy.
@M. Emad they did..nutin,,zip,,zero...out they said.
@BAXAR Mr. Keyboard Warrior At an extreme, they can do a North Korea with pakistan , stop all legal exports, stop banking channels (no one can send remittances) etc.. Any country importing even food grains, should think thrice before they act. With 200m+ people there will not be enough grass too eat
All the buster can only sound good and be heard on low quality pak TV shows
Kashmir is root cause of all problems of india and pak. We both spend billions and dozens of billion dollar trade is blocked between us due to bad relations. Kashmir pak must stop supporting violent militants and india also than withdraw army to borders etc. Gun weilding man wont help anybody. Pak must stop them crossing their border. Peaceful kashmir no matter who controls whT is must for india and pak both.
Till we fight nothing will improve for both of us.
why this situation with US and china being best friends for decades .
why this situation with US and china being best friends for decades .
We have become a nation of beggars, from the average person to the government. Everyone wants the easy way out, without working hard to better their lives!
I expect the new government to also focus on increasing the revenue my reforming the taxation and production sectors. Pakistan has a lot of talent than can be exploited to become an agricultural, industrial hub. Foremost should be to find ways to curb corruption and also force the corrupt ones by catching them and getting the nations looted assets over the last 10 years.
@M. Emad Because we Pakistanis know 'A friend in need not a friend indeed'.
I do not understand what is the point to have an iron friend when the friend cannot help in difficult time.
What happened to the pre-election tantrums of our PM ?
By looking a the picture it appears as if the Finance Minister is saying 'Sorry madam we lost of our Kashkol and we need a new one'.
@M. Emad .. Already borrowed a lot.. they are expecting to be paid by IMF bail out..we borrowing from Peter and pay it to Paul, then we will again borrow from Paul and pay it back to Peter.
There should be no further bailout by IMF, Saudi, or China. Pakistan need to manage its finances and learn to live within its mean
interesting comments..If you would know the value of money, go and try to borrow some; for he that goes a borrowing goes a sorrowing. The surest way to ruin a man who doesn't know how to handle money is to give him some. If you lend money to any of My people ... you shall not be to him as a creditor; neither shall ye lay upon him interest. good luck folks
@M. Emad Chinese will loan money but ask for something tangible in return. Plus why would Chinese loan us the money to pay them back?
@zak Pakistan has not paid dues on Chinese loans please do not make up stories.
Current scenerio would have made Mr Jinnah very disappointed..
@M. Emad The Chinese will set tough terms and conditions.
Imf would be taking huge risk if the extend loan. First fataf, then trump and poor condition of your economy. They must reject the request
looks like modi won in the end. even the friends turned their backs. imf is the consolation in isolation
@dynamite Wow, good suggestion :)
@Zakir wrong choice again .
@SeverusSnape "At an extreme, they can do a North Korea with pakistan". Sure they can, that will really hurt those currently ruling Pakistan, they'll leave for good. But are you sure they will sacrifice these assets they have invested so much in? If Yes, then we'll have a nice chat with all to solve the economic issues.
@Danish "I do not understand what is the point to have an iron friend when the friend cannot help in difficult time." You have to check your definition of friendship to understand, we probably have different ones.
@Vivek China has a huge foreign exchange reserve. It should not be making loans to other countries but gifting money.
Frankly, no shame or PTI have to eat their words for asking assistance from IMF. THE REAL SHAME IS FOR PML-N to leave Pakistan after 5 Years totally Broke by looting and Money Laundering our wealth to ENGLAND. Nawaz Shrief, his family and close relatives like DAR all are involved. Zardari had done his number in his own time. These are the real robbers of Pakistan.
New Pakistan, same bailout requests
@Mian
How do you know these numbers. Just a guess. Don't do this.
PMLN and PPP governments have been spending more that their income. It is time to payback those loans including interest. Don't blame PTI. This is a universal truth that if you spend more than your income, eventually you go broke, this is where PMLN and PPP has brought Pakistan.
@dynamite - "Modi should step in and make an offer that Pakistan cannot refuse...One time Payment of $8Bn and Pakistan should sign the dotted line"
And as soon as they get $8Bn, they will send more militants, with more advanced weapons, bought with the same $8Bn. Excellent idea! But keep it with yourself.
@Samad Afridi Buy gold with what?
Right course of action.
Since the loan would be a high risk loan, the interest rates will be high as well.
Big Man in Bigger Troubles. Hope he has now realized that making a tweet is much easier than actually running your office. If you can't learn anything from Modi, at least learn his humility.
@Harmony-1© - I would say take it as it is.. its a much better version even if untrue than pointing out that those friendly countries outright rejected any loans/aids to pakistan..
Why dramatising in every thing? When NS inverted this empire, situation was not good either. Current account deficit was huge and aid was drying up. But they did not panic and make a hue and cry. They also ran to imf for bailout. Last seventy years, country is running like this. Previously it was not visible because of free flow of aid. Only difference is, oil price was low. Now, pti is appealing for donations knowing pretty well that donation is a sophisticated way of begging. NS would have never done this, at best he would have floated a bond for expatriates. So , present government should talk less and do more. Also lock the mouths of other ministers. If sincerity is there, definitely success will follow.
Bad move by PTI
We are in large part in this situation before looters have emptied the treasury. Still they hold onto their I'll gotten gains. I hope no mercy is shown to them when they get convicted and sentanced.
@ECONOMIST you get that after 60+ billions are paid to Chinese. Just compare that money to the asking loan from IMF
It seeks, it does not seek. It seeks it does not seek. It seeks it does not seek. Which is now? And what is the number of Uturns we made?
A possible program. Possibly.
@Imran this is the best comment, one should definitely know his means and live accordingly then there will be less problem. Progress will be slow but steady. You lived beyond your means.
@Danish you didn't notice, iron brother helped. They offered 48 armed drone at an affordable rate. A friend in need is a friend indeed.
@M. Emad China is solution of all Pakistani problems?
@Real salaria Good advise to a good PM.
@zak Oh Really?
@M. Emad You can’t pay back loans already taken from China and now want more from the same entity? Please explain the logic.
taking loans to pay loans means interest rate is going northwards , pakistan needs strong economy to sustain without constant bailouts, make every able citizen pay taxes and talk with china for better deal in CPEC ....it seems china making sort cuts to middle east and rest of the world through pakistan and pakistan is paying for that sort cut
the inevitable happened battered the self respect for sure!.. Hope they use the money wisely and give a push to the econnomy and not buy more arms from China with it.
What a contradiction of sort.... Dawn reports that Pakistan has formally sought IF bail out, whereas IMF's Christin says she is yet to meet any Pakistan official formally but is willing to talk on Thursday. Do people know the difference between "formally" approaching and "being in talks"?
M. asghar "Pakistan has to move very carefully, because its present economic crisis is deeply entangled with the international geopolitical games played around the CPEC project."
Get over yourself and begin looking at facts. No projections of revenues were provided - probably because there are no revenue projections. Despite numerous overtures NO ONE has stepped up to invest in it. It has landed you in debt with obsolete technology.
Everyone knows the solution to all problems and a highly solvable one - a peaceful neighborhood instead of ego based 'we want our way' approach. None of IMF bailout would be needed. This is the start of a path from where many have not recovered. Tackle the problem head on, make compromises, leave old positions, move on towards a better life, not a bitter feud!
IK donot know how to finance the business of the Govt
it might be short term solution. but the govt needs to address the causes of the disease that is ruthless operation against corruption.
Joke with people of Pakistan
Did this step get discussed In the parliament? I thought this needed to be approved
Guys instead of playing the blame game. Make your country strong. India became strong when Indians started making money in India and overseas and sent money back to the country. Every citizen has a share of responsibility. Blame will take you all nowhere. Reform your education system and give education to your children. this will reap benefits in 15 - 20 years.
@Vijai It was 1 billion not 10 billion
@m.emad Yes China is Pakistan friend only wen their something to gain in return. True adversity shows who is your all weather friend... Pakistan should take note..
@Hwh So now you are giving money to Pak? Is it your money? easy to donate fellow countrymen's money, isn't it ?
Walking into wolf's lair!
@Mohsin Oh boy, Imran just got elected. What's your problem?
@M. Emad because chinese are asking for lot of interest on loan money.
Please, PTI, get rid of bureaucrat Tariq Bajwa as SBP Governor and replace with some competent banker of international standing.
All the chest thumping before the election has come to a bought. Same old story getting repeated.
Golden opportunity for ending socialism and embarking on free market capitalism.
Pakistan in severe alms race.
@M. Emad. Erm why should they. Business is business.
@SKChadha those are not demands,those are prescription which will make Pakistan economy strong again.
@zak live in a dream world.
@Danish "Iron friend" is a one way Pakistani concept.It matters whether the other party has reciprocal feelings.
@M. Emad They will give nothing.Loan for CPEC is with sole purpose of land grab in definite possibility of Pakistan default in repayment.They succeeded in Sri Lanka and some South African countries
Finance Minister's facial expressions tell he is way over his head and feels no remorse for sudden losses due to Low rupee value & drop in stocks.
@M. Emad it is because you have to pay a big debt to china. How can you ask for a loan from the a country to pay debts to that same country?
@Mian Did you not read the line where it said Pakistan has received more than a dozen IMF bail out packages in the past. They wouldn't have given it if they did not recover it previously. Now how many of those packages were needed and if it was actually utilized properly is another debate.
Welcome back IMF. Ignore what we said to you last time. Let's do this again.
@Vivek What do you think of China? A man who is too rich to pay debt for other country easily?
Seeking an easy way out will always weaken us even further. We must fix the real issues to get a 'real' long term solution.
Pakistan is seeking a loan package to pay off previous loans. This vicious cycle will probably go on from now.
@zak Looks like every nation is Pakistan’s friend except India.
@M. Emad , good question.