Pakistan is seeking its largest loan package of up to USD 8 billion from the IMF to bail itself out from a severe balance-of-payments crisis that threatens to cripple the country's economy, a media report said on Thursday, October 11.
The International Monetary Fund (IMF) could place strict conditionalities, forcing Pakistan to seek additional loans for meeting those restrictions and this could expand the loan facility to USD 12 billion, said the report in the Dawn newspaper.
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, it said.
The final decision, however, was announced on October 8 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 Rs 270 billion of its capitalization. On Tuesday, October 10 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 USD 6.4 billion in August 2016, which was 216 percent of Pakistan's quota at the IMF.
Meanwhile, the government came under heavy criticism after announcing that it would seek bailout assistance from the IMF, but Prime Minister Imran Khan Wednesday defended the decision. Khan said that the country was burdened due to debts incurred by the previous government and his government was constrained to borrow more money to pay back those debts.
"There has been a lot of noise in the country (after the decision to go to IMF) during the last 48 hours as if the heave is going to fall. But we need to do it (go to IMF) before our reforms start yielding results in about six months," he said.
The government's decision will create hardships for Khan as the IMF's tough conditions will result in the price hike.