IMF team holds first round of talks on possible bailout for Pakistan

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IMF Managing Director Christina Lagarde and Finance Minister Asad Umar meet on the sidelines of the IMF and World Bank annual meetings in Bali. ─ Photo courtesy IMF Twitter
IMF Managing Director Christina Lagarde and Finance Minister Asad Umar meet on the sidelines of the IMF and World Bank annual meetings in Bali. ─ Photo courtesy IMF Twitter

An International Monetary Fund (IMF) team arrived in Islamabad on Wednesday for talks on a possible bailout, even as the government insisted it had resolved the country's immediate balance of payments crisis.

The first round of talks on the matter was held between the IMF delegation and officials of the finance ministry on a "technical level", sources in the ministry told DawnNewsTV.

According to finance ministry sources, the policy-level talks between Pakistan and the Fund will begin on Monday. The government will present its estimate for an expected loan package at the end of the talks, which are expected to last until November 20.

Pakistan could ask the IMF to lend it between $6 to 8 billion, the sources said.

Speaking shortly after Prime Minister Imran Khan returned from Beijing, Finance Minister Asad Umar had said on Tuesday that assurances from China ─ combined with a pledge made by Saudi Arabia last month ─ meant that Pakistan's immediate fiscal woes were "over".

"We had a gap of $12 billion and in that $12bn, $6bn came from Saudi Arabia and the rest came from China," Umar had told reporters, without specifying the nature of the Chinese assistance.

The finance secretary and the State Bank of Pakistan governor will attend a meeting in Beijing on Friday to finalise the terms of the assistance, he added.

Pakistan secured $6bn in funding from Saudi Arabia and struck a 12-month deal for a balance of payments lifeline during Khan's visit in October.

Despite the pledges, the finance ministry said Pakistan would still seek broader IMF support for the government's long-term economic planning.

Since taking power in August, PM Khan has been searching for ways to rally the struggling economy hit by inflation and shore up the country's dwindling foreign currency reserves.

As well as a highly-publicised austerity drive, including auctioning off government-owned luxury automobiles and buffaloes, the new prime minister has also made overtures to the IMF ─ which has bailed Pakistan out repeatedly since the 1980s.

However, Islamabad received billions of dollars in Chinese loans to finance ambitious infrastructure projects, and the US ─ one of the IMF's biggest donors ─ has raised fears that Pakistan could use any bailout money to repay its debts to Beijing.

Islamabad ─ which last received an IMF bailout in 2013 to the tune of $6.6bn ─ has refuted these claims.

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