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Is Pakistan Seeking a Fresh IMF Bailout?

by AFP and Newsweek Pakistan
IMF’s Christine Lagarde, June 14, 2011. Martin Bureau—AFP

IMF’s Christine Lagarde, June 14, 2011. Martin Bureau—AFP

Pakistan heads to Washington to ‘update’ IMF, World Bank, U.S. officials.

A Pakistani delegation led by the newly-appointed adviser on finance to the prime minister is scheduled to leave today for Washington, D.C., to attend the annual 2013 Spring Meetings of the World Bank Group and International Monetary Fund.

Headed by finance adviser Dr. Shahid Amjad, the delegation also includes the federal secretaries for finance and economic affairs, the governor of the State Bank of Pakistan, and the chairman of the Federal Board of Revenue. Their schedule includes meetings with their international counterparts, officials at the U.S. State and Treasury departments, and ratings agencies, according to a press release issued by the finance ministry in Islamabad on Monday.

The 2013 Spring Meetings kicked off yesterday and will conclude on Sunday. The Pakistani team is expected to arrive back home on April 22.

The annual event features “thousands of government officials, journalists, civil society organizations, and invited participants from academia and private sectors,” says the IMF’s website. “At the heart of the gathering are meetings of the joint World Bank-IMF Development Committee and the IMF’s International Monetary and Financial Committee, which discuss progress on the work of the World Bank and the IMF.” The Spring Meetings will also feature seminars, regional briefings, press conferences, and other events focused on the global economy, international development, and the world’s financial markets, it says.

On the sidelines of the 2013 Spring Meetings, U.N. Secretary-General Ban Ki-moon and World Bank President Jim Yong Kim are expected to preside over sessions, on April 17 and 18, on achieving universal girls’ education in line with the Millennium Development Goals. Gordon Brown, the former British prime minister and now the U.N.’s special envoy on global education, is expected to remark in particular on the challenges facing girls’ education in Pakistan.

Pakistan has seen its foreign exchange reserves dwindle, its currency slide, and has been expected to seek a fresh bailout package from the IMF.

The agency bailed out Pakistan in November 2008 with a loan package of $11.3 billion to stave off a balance-of-payments crisis, but Pakistan abandoned the deal in 2011, refusing to carry out strict financial reforms. The IMF has urged Pakistan to reduce its large budget deficit to bolster its struggling economy. Pakistan’s growth remains too weak, underlying inflation is high, and the trade balance is heading in the wrong direction, the IMF said in a statement in November.

The Pakistani delegation will also meet State Department officials to discuss Coalition Support Fund reimbursements—money paid by the U.S. to compensate Pakistan for its fight against Islamists. Islamabad has paid back more than $2 billion in loans to the IMF, but analysts say the repayments strain the rupee and drain reserves, which neither remittances nor Coalition Support Fund payments can make up for.

“We will engage with them and update them on macroeconomic data,” a finance ministry official said on condition of anonymity. He refused to comment on local media reports claiming that the team would seek a new IMF package.

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1 comment

Mumtaz Piracha April 16, 2013 - 3:25 pm

How long can Pakistan sustain on crutches? How long can bail-outs work? How long can aid keep the country going? What is needed is good governance. That’s probably not the priority of the political leadership nor is it of lenders, donors and financiers. Pakistan is close to an economic collapse but nobody seems to be concerned about it. Look at its hyper-inflation, poverty, unemployment, energy crisis, lawlessness, and a host of other crippling issues. Who is going to help solve them?

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