ISLAMABAD: After initial hesitance and delays, Pakistan Monday announced to approach the International Monetary Fund (IMF) for a bailout package to address the mounting balance of payments crisis faced by the cash-strapped country.
The decision to approach the IMF was taken by Prime Minister Imran Khan who had in the past opposed such measures to support the economy.
Finance Minister Asad Umar said that talks with the IMF will start immediately as Prime Minister Khan approved the decision after consultations.
"It was decided today that we should start negotiations with the IMF for a stabilization and recovery program so that we should bring the current difficult economic situation under control," Umar said in video message.
Sources in the finance ministry said that government explored all options including asking friendly countries for support as well as seeking donations from the overseas Pakistanis before going to the IMF.
Umar is expected to lead a delegation to attend the annual meeting of IMF and World Bank in Bali, Indonesia from October 12 to 14, where he will start initial talks for the bailout package.
It may take a few months before the agreement is reached and money starts pouring from the IMF.
It was not known how much support the government would seek from the IMF but sources said that Khan's government needed at least USD 9 billion to meet the current account deficit.
An assessment by the State Bank of Pakistan and the Finance Ministry showed that Pakistan needed USD 11.7 billion to service its external debt in current fiscal year 2018-19.
The IMF assistance should be enough to bridge the deficit gap and support the plummeting foreign exchange reserves which have below USD 10 billion.
The government has come under criticism from various quarters including opposition for delaying the decision to approach the IMF soon after winning the elections on July 25.
The decision will create hardship for Khan as IMF tough conditions will surely result in price hike.
According to Bloomberg, Pakistan has availed 12 IMF bailouts since the late 1980s.
The last one was in September, 2013 when the IMF approved a USD 6.6 billion loan support to Pakistan government's programme to stabilise its economy and boost growth while expanding its social safety net to protect the poor.