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Jul 06, 2013 12:03 pm views : 1706

IMF Official & Finance Minister Joint Press Conference, Islamabad

pakistan, imf agree on $5.3 billion bailout package 

Pakistan asked for a new $5.3 billion bailout loan programme from the International Monetary Fund on Thursday (July 5) after talks with a visiting delegation from the global lender.

Holding a news conference in Islamabad, Finance Minister Ishaq Dar said the government of Pakistan and International Monetary Fund have reached an agreement for a three-year programme of at least 5.3 billion dollars under an extended fund facility.

Jeffrey Franks, the regional adviser to the Fund on Pakistan, told reporters speaking alongside the Pakistani finance minister that it was a Pakistan designed programme. It includes bringing the fiscal deficit to a more sustainable level.

The IMF expects Pakistan to reach a budget deficit target of six per cent of gross domestic product as part of its bailout loan programme, said Franks.

The floating interest rate would be set at three per cent and that the loan would be payable over a longer period than conventional stand-by arrangements, he said.

Franks said the loan was subject to further approval within the IMF and would then go to the executive board in early September.

The successful conclusion of talks comes at a time when Pakistan's central bank has only about $6.25 billion left in reserves, enough to cover less than six weeks of imports.

Dar said there was no option but request the loan to save Pakistan from defaulting.

As part of the loan agreement, Franks added, the Pakistani government has developed plans to improve tax collection and to eliminate tax loop holes and exemptions. It also had a programme to restructure and even privatise public sector enterprises, which would generate significant revenues.

Anxiety over the nation’s struggling economy is one of the many challenges facing the new Pakistan Muslim League - Nawaz (PML-N) government.

With reserves shrinking by around $500 million a month and with many Pakistanis already angry over unemployment, high food prices and crippling power cuts, Prime Minister Nawaz Sharif is keen to be seen as a decisive man capable of overhauling the economy.