Pakistan’s finance minister announced a range of measures on Wednesday to narrow fiscal and trade deficits as prime minister Imran Khan prepares to present the government’s case to the IMF for a loan to rebuild confidence in the country’s economy, the Financial Times reported. In a speech in the lower house of parliament, Asad Umar unveiled a cut in import duty on industrial raw materials to raise industrial productivity and help ease a chronic energy crisis that has caused repeated power outages and gas supply interruptions.
Pakistan’s currency plunged as much as 5 per cent on Friday in what traders suspect was a devaluation of the currency amid rescue talks with the IMF, the Financial Times reported. The currency traded as weak as 141 rupees to the US dollar, from Thursday’s closing level of 133.9, according to Refinitiv data. ”The IMF’s main demands [for a new loan] included a devaluation of the rupee,” a central bank official in Karachi told the Financial Times. The rupee has tumbled about a fifth since the end of last year in a series of devaluations to avoid a balance of payments crisis.
Pakistan’s prime minister Imran Khan was welcomed in Beijing with full honours and promises of support but hopes of Chinese help to rescue the country from a looming balance of payments crisis were dented by the conspicuous absence of any concrete announcement of generous aid, the Financial Times reported. Pakistan is seeking its 13th bailout since the 1980s from the International Monetary Fund. An IMF delegation is expected to visit Islamabad this week to begin discussions on a crucially important new loan to help avert crisis.
The International Monetary Fund launched formal bailout talks with Pakistan on Thursday, and IMF managing director Christine Lagarde said she would require “absolute transparency” of Pakistan’s debts, including those owed to China, Reuters reported. She said such disclosures were necessary to determine the debt sustainability of countries seeking IMF loans. The requirements are likely to shine a spotlight on the extent, composition and terms of Pakistan’s debts to China for infrastructure projects as part of Beijing’s massive Belt and Road building program.