BY AGENCIES ———— International Monetary Fund (IMF) chief Christine Lagarde has said that Pakistan has formally requested for financial assistance from the Fund to address its economic woes.
In a statement issued on Thursday, Lagarde said that she met with Finance Minister Asad Umar, State Bank Governor Tariq Bajwa and members of their economic team. “During the meeting, Pakistan requested financial assistance from the IMF to help address its economic challenges,” she said.
To discuss the matter, the IMF chief said that a team will visit Islamabad in the coming weeks to initiate discussions for a possible IMF-supported economic programme.
IMF ✔ @IMFNews .@Lagarde: I met today with #Pakistan’s Finance Minister @Asad_Umar and his team, who requested our financial assistance to address Pakistan’s economic challenges. IMF team to visit Islamabad in the coming weeks to discuss a possible IMF-supported program http://ow.ly/Inyb30mbExq
The formal request follows an apparent seven per cent central bank devaluation of Pakistan’s rupee currency on Tuesday.
Earlier in the day, Lagarde had said that she would meet with Pakistani officials with expectations that Islamabad will request a bailout of its shaky economy. “I’m assuming that there might be a programme request on their part, but that has not been discussed and we will explore that this afternoon,” she had told a press briefing.
Finance Minister Asad Umar announced earlier this week that the government would seek talks with the IMF on a “stabilisation recovery programme”.
On Wednesday, Prime Minister Imran Khan vowed to steer the country out of a looming balance-of-payments crisis, saying it needs $10-12 billion. “We will get out of this. I will take (the country) out of this,” he had said.
PM Imran’s 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.
Pakistan has gone to the IMF several times since the late 1980s. The most recent was in 2013 when Islamabad got a $6.6 billion loan to tackle a similar crisis.
Furthermore, the World Bank in its latest report predicted that the economic condition of Pakistan was likely to remain unstable for the next two years and it needs investment and productivity-driven growth.
World Bank country director Illango Patchamuthu has said that Pakistan’s growth has to be driven by investment and productivity which will put it on a path to end the boom and bust cycle its economy faces.
“This will create more and better-paid jobs and is a reliable path to future economic growth and stability,” said the director while commenting on the World Bank’s twice-a-year report, Pakistan Development Update.
The report suggested Pakistan’s needs to address growing fiscal and current account deficits on a sustainable basis for long-term growth. The country’s economic growth accelerated to 5.8 per cent in the 2018 financial year – the highest level in more than a decade, the report said.
But as consumption-led growth picked up, the macroeconomic imbalances also grew, increasing vulnerabilities that compromise future growth.
Meanwhile, the report also proposed a number of structural reforms in various sectors including Pakistan’s revenue sector.
Earlier on Oct 10, Finance Minister Asad Umar held a meeting with the World Bank President Dr Jim Yong Kim on the sidelines of the World Bank/IMF Group Annual meetings in Bali, Indonesia.
In the meeting, the current level of cooperation between Pakistan and the World Bank was reviewed.
The finance minister shared with Kim the vision of the Pakistan Tehreek-e-Insaf (PTI) government and its priorities.
Asad Umar also held a number of meetings on the sidelines of the World Bank/IMF Group Annual meetings. He also met with his Indonesian counterpart Sri Mulyani Indrawati and discussed matters pertaining to expansion of bilateral cooperation between the two countries.
Finance Minister Umar emphasised expanding trade relations between Pakistan and Indonesia and called for expediting the process of ratification of the additional tariff lines granted to Pakistan after a comprehensive review of the Preferential Trade Agreement (PTA) in 2017.
The minister also held meetings with senior officials of the Multilateral Investment Guarantee Agency (MIGA) and OECD.
Over 15,000 delegates from 189 countries are currently gathered at Bali, Indonesia for IMF/WB Group Annual meetings from October 10-14.
The finance minister is leading Pakistan’s delegation, consisting of the State Bank of Pakistan governor, economic affairs division secretary and special secretary of the finance division.