Pak has only six weeks to raise $10bn

IMF is its only hope after old allies China, US and Saudi Arabia refuse aid

ISLAMABAD: Groaning under grave financial pressure, cash-strapped Pakistani government has decided in principle to seek assistance from the International Monetary Fund (IMF) after its failure to acquire the much needed bail-out from China and Saudi Arabia in a bid to avoid defaulting on its debt obligations.

Following the US and Chinese government’s refusal to provide hard cash to Pakistan, which is one of the world’s riskiest borrowers, the political leadership has made up its mind to knock at the doors of the IMF. Confronted with an unprecedented economic crisis, Pakistan has now moved closer to a balance of payments crisis, as the Pakistani rupee has slumped to a record low after the state bank conceded it had barely enough foreign currency to cover six weeks of imports.

Under these circumstances, Islamabad needs at least $10bn to avoid defaulting on its debt obligations besides boosting its foreign-currency reserves, which fell more than 75% in the past year to about $4bn. The next interest payment for Pakistan on its dollar-denominated bonds is due in December. Therefore, the government is likely to accept the emergency support package offered by the IMF.