No Help From All-Weather Friend China? Imran Khan Led Pakistan Decides To Approach IMF For A Bailout Package

The new Pakistani government was initially hesitant on asking for a bailout package from International Monetary Fund (IMF) for its dwindling economy, but on Monday it announced that the country will approach the IMF for a bailout package, reported The Economic Times.

Prime Minister of Pakistan Imran Khan, who in the past was opposed to such measures, took the decision in the wake of the mounting balance of payments being faced by the cash-strapped country.

Pakistani Finance Minister Asad Umar has said that negotiations with the multilateral agency will commence immediately.

Umar said, "It was decided today that we should start negotiations with the IMF for a stabilisation and recovery programme so that we can bring the current difficult economic situation under control,"

According to the paper, Pakistan approached the IMF only after it has exhausted all of its options, which included asking for help from all friendly countries as well as seeking donations from overseas Pakistanis.

The amount that Pakistan will seek from the IMF is unknown, but it needs at least $9 billion to meet its current account deficit. The State Bank of Pakistan and Finance Ministry has assessed that Pakistan, in the current fiscal year, needs $11.7 billion to service its external debt.

Pakistani Finance Minister is expected to go to Bali between 12 and 14 October to attend a meeting of IMF and World Bank, where he will start initial talks for the bailout package.

The decision can result in a price hike in Pakistan due to the tough conditions that IMF sets while providing bailout packages. This could create an uncomfortable situation for Imran Khan.

Pakistan has taken 12 bailout packages from IMF since the late 1980s, the last one being $6.6 billion in September 2013.