SLAMABAD- Pakistan is all set to seek a bailout package of up to $5 billion from the International Monetary Fund to repay its loans as the IMF team is arriving Islamabad tonight on a five-day visit.
Sources say that during the first phase Pakistan and IMF would talk about the Post Programme Monitoring (PPM) and later a bailout package of $3 to $5 billion would be sought to repay loans.
Pakistan has to pay loans of $3 billion to the Fund during the financial year 2013-2014 for which the country needs foreign reserves.
“We will never accept any loan programme if IMF links it with quarterly increase in gas and power tariff”, said a Finance Ministry official. He added that Pakistan would take loan on easy conditions.
He said that Pakistan would seek to get Letter of Comfort (LoC) from the IMF after assessment of economic situation that would help in getting loans from the Asian Development Bank (ADB) and World Bank (WB).
Talking about the alternative plan, the official said ‘we have also plan B that would help in generating foreign reserves of $3 billion to repay the loans.
He added that Pakistan would receive $1 billion by auctioning 3G licenses, $800 million was due on Etisalat against the privatisation of the Pakistan Telecommunication Company Limited (PTCL) and $1.2 billion was due under the coalition support fund of the United States. Finance Minister Ishaq Dar had said on Thursday that a new package would be negotiated with the IMF— but on Pakistan’s terms.
Addressing the post-budget press conference, the finance minister said Pakistan will negotiate a new programme with the Fund to obtain a loan for meeting its obligations towards the institution, but “national interests” will not be compromised.
Dar said in its visit from June 19, the IMF mission would also review the country’s ability to pay back the earlier obtained loans.
“Talks will also be held for a programme but on terms and conditions of Pakistan,” said Dar. The IMF’s dictation will not be accepted, he added. “We will take loans to the extent we owe to the IMF.”
Pakistan had earlier obtained an $8 billion loan and has paid back $3.7 billion, leaving it with a balance of roughly $4.3 billion. The finance minister said there was no harm in obtaining loans to the extent of paying back earlier loans.
In November 2008, Pakistan had signed an $11.3 billion programme with the IMF to avoid possible bankruptcy. However, the monetary body prematurely terminated the arrangement following Pakistan’s inability to initiate crucial fiscal and energy reforms. The budget 2013-14 carried the required level of fiscal adjustments that IMF had demanded.