Pakistan lodges IMF bailout request: FinMin source

Published July 4, 2013
The image shows Finance Minister Ishaq Dar and Prime Minister Nawaz Sharif. — File photo
The image shows Finance Minister Ishaq Dar and Prime Minister Nawaz Sharif. — File photo

ISLAMABAD: Pakistan has requested a new bailout loan package from the International Monetary Fund following weeks of talks with an IMF delegation, a finance ministry source said on Thursday.

No other details were immediately available but the request marks a step forward for Prime Minister Nawaz Sharif as he tries to find ways to fix Pakistan's finances and restructure its moribund economy.

But it also highlights a sense of urgency for Pakistan at a time when its central bank has only about $6.25 billion left in reserves, enough to cover less than six weeks of imports.

Lodging a request is the first step in a potentially long process which involves holding more talks on the size of a loan as well as a set of reform commitments from Pakistan's side.

“Talks are still ongoing but we will have to wait for results after the IMF team returns to Washington and reviews Pakistan's terms,” a senior finance ministry official told Reuters.

“For the IMF, broadening the tax net and decreasing subsidies on the energy sector will be the make-or-break steps it wants Pakistan to commit to.”

Anxiety over the nation's struggling economy is one of the many challenges facing its new government.

With reserves shrinking by around $500 million a month and with many Pakistanis already angry over unemployment, high food prices and crippling power cuts, Prime Minister Sharif is keen to be seen as a decisive man capable of overhauling the economy.

But any IMF reform package, which usually comes with conditions attached, could also prove unpopular, adding to concerns over instability at a time when Pakistan is already under pressure to contain a growing insurgency.

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