13 October 2018 12:03 am
ISLAMABAD (Reuters),-From cutting power subsidies to forcing currency devaluations that stoke inflation, the hard choices facing Pakistan as it seeks a bailout from the International Monetary Fund (IMF) pose a major headache for populist new Prime Minister Imran Khan.
Pakistani officials met IMF representatives this week in Bali and formally requested Islamabad’s 13th bailout since the late 1980s to give the economy breathing room, while they implement reforms aiming to end decades of boom and bust cycles.
On top of lending the nuclear armed state billions of dollars to avert another balance of payments crisis, the IMF is this time expected to push Islamabad much harder to enact structural reforms needed to rebalance the economy, and rein in spending that has boosted growth but blown out the government budget.
Talks with the IMF have been launched and managing director Christine Lagarde has already said she would require “absolute transparency” of Pakistan’s debts, including those owed to close ally China. Any reforms prescribed by the IMF would threaten Khan’s lofty campaign promises, like his vow to create 10 million jobs and establish an “Islamic welfare state” modeled on the ideas first voiced by the Prophet Mohammad in the holy city of Medina.