IMF Chief: Leaders need to fix broken economic models, Pakistan seeks bailout

IMF Chief: Leaders need to fix broken economic models, Pakistan seeks bailout

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Pakistan, the flagship country for China’s global infrastructure building initiative, said Monday that it needed a bailout from the International Monetary Fund, amid growing concerns that Beijing’s program is pushing recipient countries into financial crisis.

International Monetary Fund (IMF) chief Christine Lagarde said she would meet with Pakistani officials on Thursday, with expectations that Islamabad will request a bailout of its shaky economy.

Her comments come as a trade spat between China and the United States threatens economic growth around the world, with IMF experts warning of “new vulnerabilities” in the global system.

“We need to work together to de-escalate and resolve the current trade disputes,” Lagarde said at an IMF and World Bank gathering in Bali.

“We need to join hands to fix the current trade system, not destroy it,” she added.

Finance Minister Asad Umar, who is attending the fund’s annual meeting in Bali, announced earlier this week that the government would seek talks with the IMF on a “stabilization recovery programme”.

Lagarde said the IMF was yet to receive anything formal from Islamabad but that she and other IMF officials would meet with the Pakistani delegation in Bali on Thursday afternoon.

“I’m assuming that there might be a programme request on their part, but that has not been discussed and we will explore that this afternoon,” she told a press briefing.

Prime Minister Imran Khan on Wednesday vowed to steer the country out of a looming balance-of-payments crisis, saying it needs $10-12 billion.

“We will get out of this. I will take (the country) out of this,” he said.

Khan’s new administration took office in August vowing to weigh up whether to seek an IMF bailout as it sought other avenues of financing.

He has sought loans from friendly countries, promised to recover funds stolen by corrupt officials, and embarked on a series of populist austerity measures.

But help has been in short supply and economists’ warnings have grown increasingly urgent.

Pakistan has gone to the IMF several times since the late 1980s. The most recent was in 2013, when Islamabad got a $6.6bn loan to tackle a similar crisis.

The IMF’s latest report on world financial stability, released Wednesday, said global growth could be at risk if emerging markets deteriorate further or trade tensions escalate.

“New vulnerabilities have emerged and the resilience of the global financial system has yet to be tested,” it said in the twice-yearly Global Financial Stability Report.

 

 

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