IMF giving Pakistan tough time in ‘unimaginable’ economic crisis — PM

Afghan child workers carry sacks of sugar at the zero point Torkham border crossing between Afghanistan and Pakistan. (AFP)

• Local currency at record low after being in free fall
• Foreign reserves down less than three weeks import cover

ISLAMABAD: Pakistan Prime Minister Shehbaz Sharif said on Friday the International Monetary Fund was giving his country a tough time over unlocking stalled funding from a $6.5 billion bailout, at a time of “unimaginable” economic crisis.
Hours after his remarks, the Pakistani rupee hit a record low against the US dollar in a steep slide since last week.
Sharif made the comments in a meeting of civil and military leaders in the northwestern city of Peshawar he chaired to prepare a response to Monday’s mosque bombing that killed more than 100 people.
“Our economic situation is unimaginable,” the premier said. “As you know, the IMF mission is in Pakistan, and that’s giving us a tough time,” he said.
“You all know we are running short of resources,” Sharif said, adding Pakistan “at present was facing an economic crisis.”
IMF’s Pakistan representative did not immediately respond to Reuters request for comment.
Sharif made the remarks in the context of funds the country might need for any military or counter-terrorism response to the resurgent Islamist militancy.
FREE FALL
The IMF mission is visiting Pakistan to discuss fiscal consolidation measures the institution needs from Pakistan to clear a 9th review of its Extended Fund Facility, aimed at helping countries facing balance-of-payments crises.
Pakistan’s central bank reserves at present stand at $3.09 billion, the lowest since 1998 and not enough to cover the cost of three weeks of imports.
The IMF’s demands aimed at controlling the country’s budget deficit have led to Pakistan leaving its currency to market based exchange rates and hiking fuel prices.
The Pakistani rupee fell by 1.9 percent to a record low of 276.58 per dollar in the inter-bank market on Friday, according to the central bank.
The local currency has dropped 16.5 percent since the artificial cap was removed last week to leave the rupee’s value to be decided by a market-based exchange rate regime.
The rupee also shed 2.65 percent against the US dollar on the open market, according to the association of exchange companies.
Islamabad is in a $6.5 billion IMF program.
An IMF delegation is in Pakistan to restart talks stalled since November for $2.5 billion funds yet to be disbursed.
Still, despite the economic situation, Sharif said his country will do whatever possible to fight militancy.
“We will use all resources in our capacity to fight this menace,” he said.