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Islamabad (AFP) – Pakistan is entering into negotiations with the International Monetary Fund for a rescue plan to stabilize its faltering economy and block dwindling supplies, its finance minister said on Monday.
The new administration of former cricketer Imran Khan took office in August, facing a balance of payments crisis, which immediately triggered a highly publicized austerity drive while the government was looking for to determine if he was going to ask for an IMF bailout.
"The Prime Minister, after consulting all major economists, has decided today to start discussions with the IMF," Finance Minister Asad Umar said in a video posted on Facebook and Twitter. .
Umar said the main focus of the talks would be a "stabilization stimulus package" aimed at controlling the economic crisis in the country.
Pakistan has visited the IMF several times since the end of the 1980s. The last time, it was in 2013, when Islamabad got a loan of 6.6 billion dollars to make facing a similar crisis.
Umar did not specify the amount that Pakistan would seek.
Analysts estimate that Pakistan needs a loan of about $ 12 billion to pass the course, but a diplomat told AFP in August that Islamabad was betting on a loan of at least $ 6.5 billion. dollars to get through the crisis.
However, the United States, one of the IMF's biggest donors, has expressed concern that Pakistan may not be able to use any amount of financial aid to repay growing loans from the IMF. China, sparking criticism from Islamabad.
Umar will attend the annual meeting of the IMF and the World Bank in Bali, Indonesia this week, according to Pakistani media.
The IMF said Thursday in a statement that Pakistan needed significant external funding in the near term, and recommended an increase in gas and electricity tariffs, while advocating for a "flexibility" of exchange rate and a tightening of monetary policy.
"These measures would help reduce current account pressures and improve debt sustainability," the fund said in a statement after a routine visit by an IMF delegation to Pakistan.
The IMF also warned the new government that growth would probably slow and that inflation would continue to rise if it did not move quickly.
For months, analysts warned the new Khan government that the new current account crisis could undermine its currency and its ability to repay billions of debts or buy imports.
