After the US Secretary of State Mike Pompeo’s visit to Pakistan, the International Monetary Fund (IMF) team is ready to visit Pakistan with a bailout package of $7.5 billion. IMF visiting Pakistan September 27 on Thursday.
According to the sources, the IMF team will offer a complete program of extended funds to Pakistan comprising the second part of the Extended Fund Facility (EFF) arrangement. However, Pakistan demanded double-digit program but IMF only agreed to extend only $7.5 billion to Pakistan out of the quota $13 billion for Pakistan.
The fund had already contracted $6.4 billion bailout in 2013 which was completed in 2016. Since Pakistan started receiving bailouts in 1988, only the previous one out of 11 reached completion in 2016. Pakistan has refused to take last two portions of another program during President Musharraf’s rein the rest of 8 programs ended in failure.
According to an official in Ministry of Finance, the IMF team is not visiting Pakistan to consult the financial matters, rather the homework from both sides has already been completed and the team is coming to finalize the arrangements.
The extended program is not coming for granted rather it will bring strict conditions on the decisions made by the government, the conditions may include institutional reforms, SBP independence, flexibility in exchange rates, increase in utility charges, privatization of state-owned public companies and many more.
Pakistan has projected $31 billion through external financing during the current fiscal year, the government is also looking for the other available options in its kitty along with bridging the gap in external financing by taking some strong measures including a ban on non-essential imports such as; mobile phones, cheese, cars, and fruits, the measure could save some $4-5 billion for the government.
Pakistan’s economy is facing sheer external pressure which plunging foreign reserves around $10 billion, this could only cover a two-month import bill. According to the sources, IMF team is visiting Pakistan after receiving a green signal from the US secretary of State Mike Pompeo, during his visit to Pakistan he assured that Washington will not block any IMF bailout that Pakistan has requested. However, Pompeo earlier tried to convince Washington that Islamabad will use IMF bailout to pay off Chinese loans.