https://www.dawn.com/news/1430852/imf-by-month-end-very-likely-says-citi
KARACHI: With projected external financing requirements of $31 billion in FY19,
Pakistan is “very likely to seek an International Monetary Fund (IMF) programme”, says Johanna Chua, Citigroup’s Head of Emerging Markets Asia Economics & Strategy Bank in a report released on Monday.
The report says an approach is likely by end September.
“The sheer size of Pakistan’s external financing gap and an experienced list of technocrats advising the government on economic issues will likely lead to the same conclusion” she says, going on to warn that
“not going to the IMF is a far more economically and politically painful/riskier option than otherwise.”
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Concerns over the lack of urgency on the part of the government could potentially drag the negotiations, the report continues.
The report challenges Imran Khan’s claims on “attracting overseas diasporas money and bringing back looted wealth” labelling the approach “unrealistic and inadequate”.
Stressing the need to deal with loss-making Public Sector Enterprises and circular debt, the report highlights “the accumulation of new payment arrears of power distribution companies (circular debt), which was brought to near zero levels in FY 2016 has been climbing since, reaching 596bn — 1.7 per cent of the GDP,” requires immediate attention. Criticising, the talks of setting up a sovereign wealth fund, the report termed viability of such project “unclear”.
In the unlikely event of Pakistan not opting for an IMF program, the government will more likely “lean on import controls” and suffer higher funding costs.
