Pakistan’s Finance Minister Shamshad Akhtar, while interacting with the media reporters on Thursday (Nov 16), said that the country is likely to need financial aid from the International Monetary Fund and hence, is likely to seek another bailout from the international multilateral lender.
“We need to continue with the IMF as our economy is still fragile and we will possibly seek another loan,” stated Akhtar, who is the finance minister of the caretaker government.
The comment was made by the minister a day after a staff-level agreement for a $700 million payout was reached by the South Asian nation with the IMF under an existing programme, which highlighted the deepening financial crisis being faced by the country that is battling economic and political turmoil.
Pakistan’s dollar-denominated debt of around $1 billion is coming due next year after the elections are conducted in February. Although the country is on the path of economic recovery, the country is susceptible to significant external risks, stated the IMF in a statement on Wednesday (Nov 15) after successfully concluding talks with the caretaker government of Pakistan.
Pakistan to hold elections in February
The interim government’s term ends in February as the country votes in national elections to elect a new administration.
Akhtar stated that the caretaker government will try to speak to the IMF for the next programme as the country will need the help of the international lender to consolidate macroeconomic stability. She stated that the foreign reserves of the country will increase in December after the materialisation of the pledges made by global lenders.
A plan of raising funds from the global bond market was postponed by Pakistan as it won’t fetch them the best price, stated the minister, further adding that the country is looking for other funding sources.
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A default on its debt was averted by Pakistan after it secured the current nine-month loan programme in July from the IMF and it is expected that the completion of its first review along and inflows from other lenders will boost its dwindling reserves which fell $115 million to $7.4 billion. This decline is equivalent to less than two months of the country’s imports.
The IMF agreement also gave a boost to the caretaker government of Pakistan under Prime Minister Anwaar-ul-Haq Kakar. The prime minister is making an attempt to secure $6.3 billion in loans from the Asian Development Bank, World Bank, and Islamic Development Bank, and around $10 billion in bilateral funding from creditor nations.
As per reports, investors have been showing optimism about the fiscal recovery of Pakistan on the back of the IMF loan that has increased by more than 50 per cent return on its dollar bonds this year.
(With inputs from agencies)