Pakistan PM Sharif says another IMF bailout is inevitable

By Thomson Reuters Mar 21, 2024 | 6:47 AM

By Asif Shahzad

ISLAMABAD (Reuters) -Pakistan’s Prime Minister Shehbaz Sharif said on Thursday that a long-term bailout from the International Monetary Fund (MF) was inevitable given the South Asian country’s broken economy.

The comments came a day after the IMF agreed a provisional or staff-level agreement with Islamabad which, if approved by its board, would disburse the last tranche of $1.1 billion under an existing $3 billion standby arrangement.

“We hope to get the $1.1 billion IMF tranche next month,” he told a meeting in Islamabad that was broadcast live, adding: “We couldn’t survive without yet another IMF programme.”

With a long-term, two-to-three year IMF programme, he said, the $350 billion economy that has long been under extreme stress with a yawning balance of payment crisis would need deep-rooted structural reforms.

The IMF mission that visited Islamabad for five days on the last review of the stand-by programme said Pakistani authorities expressed interest in yet another bailout.

The stand-by arrangement expires on April 11. The lender has already said it would formulate a medium-term programme if Islamabad applies for it.

The government has not officially stated the size of the additional funding it is seeking under the long-term bailout. Bloomberg reported in February that Pakistan planned to ask for a loan of at least $6 billion.

Ahead of the stand-by arrangement, Pakistan had to meet IMF conditions including revising its budget, and raising interest rates, as well as generating revenue through more taxes and hiking electricity and gas prices.

It resulted in inflation rising as high as 38% last summer, a historic depreciation in the local currency and the economy contracting.

(Reporting by Asif Shahzad; Editing by Andrew Cawthorne and Alex Richardson)