ISLAMABAD, (Financial Updates): Pakistan is to ask the International Monetary Fund (IMF) to ease the terms of a stand by arrangements loan after enduring the worst floods in its history.
Pakistan's Finance Minister Abdul Hafeez Shaikh will go to Washington next week, where he will meet with the IMF and to try and persuade the Fund to restructure the current loan or consider new financing.
The meeting will be initiated among the Pakistani team and the Fund’s team from 23rd August at the Headquarters of the IMF, Washington DC.
The Pakistani economic team has concluded that it is now impossible for it to meet the conditions of the lending program including budget deficit, inflation rate and GDP growth , agreed 2008, said an official of the finance ministry.
"Meeting the IMF performance criteria of the current program is impossible under the present circumstances," said a finance ministry official.
"The losses from the floods are huge and we are in no position to meet targets on critical areas such as budget deficit, reducing inflation or even economic growth."
The IMF in 2008 approved a rescue package worth of $ 7.6 billion for Pakistan as the country was plunged into balance of payment current account deficit, reducing foreign exchange reserves and 30-year-high inflation, but later on, the Fund increased the loan on the request of Pakistan to $ 10billion.
Pakistan has to return the loan from February 2011 and first tranche around about $ 400 million according to the schedule. It is expected that Pakistan will also try for rescheduling of loan so that it can focus on the reconstruction and rehabilitation work in the flood-hit areas.
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