Pakistan is seeking its largest loan package of up to $8 billion from the International Monetary Fund (IMF) to bail itself out from a severe crisis that threatens to cripple its economy, according to diplomatic sources.
The sources told Dawn news on Wednesday that the IMF could place strict conditionalities, forcing Pakistan to seek additional loans for meeting those restrictions and this could expand the loan facility to $12 billion.
Pakistan began exploring the possibility of yet another loan package with the IMF while the Pakistan Muslim League-Nawaz (PML-N) was still in power and the exploratory talks continued under the interim government as well.
The final decision, however, was announced on Monday night when Finance Minister Asad Umar confirmed that the government was going to the IMF to bail Pakistan out of its foreign currency crisis.
The announcement followed the highest single-day loss in a decade in the stock market, which plunged by over 1,300 points, losing almost 270 billion Pakistani rupees of its capitalisation.
On Tuesday, the IMF said that it would listen to Pakistan’s request for financial support “very, very attentively”, as it did with any member with good standing.
Pakistan has received more than a dozen financial support packages from the IMF in the past. It completed the last three-year package of $6.4 billion in August 2016, which was 216 per cent of Pakistan’s quota at the IMF.
The previous programme also aimed at “bringing down inflation and reducing the fiscal deficit to more sustainable levels”, Dawn news said.
It included measures to “help achieve higher and more inclusive growth, in particular through addressing bottlenecks in the energy sector”.