IMF Chief optimistic about Pakistan loan deal, says country’s debt sustainable

–Seeks financial assurances from Pakistan’s allies for bailout deal completion

–Says Pakistan has yet to reach bankruptcy and better not

WASHINGTON, Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva has expressed the hope that Pakistan will successfully complete the current loan programme and not face the same situation as Sri Lanka and Ghana, but Pakistan is at risk of bankruptcy.

She says that Pakistan has not got there though and it is better not to

get there.

Delivering her speech at the annual meeting of the International

Monetary Fund (IMF) and the World Bank in Washington, the IMF chief said

there is no doubt that Pakistan is facing climate challenges, but there

is hope from the steps taken by the Pakistani authorities. will

successfully complete this programme.

Kristelna Georgieva said at this time they were talking about providing

financial guarantees of Pakistan. “To be at the forefront of change, one

must think about the future sustainability of agriculture in Pakistan.”

Kristelna Georgieva said that they are working hard together with the

Pakistani authorities, and the country should create such a political

framework that avoids economic risks. “We want Pakistan to move towards

sustainable economic development. We want assurance of financial

support.”

Asked about the risk of Pakistan failing, the IMF chief replied that

Pakistan has not yet reached that point and it is better not to, to

avoid the consequences of a growing global trade divide for all

countries to prevent a second Cold War. “I am one of those people who

know what the consequences of the Cold War were, the Cold War was a

great loss of competence and partnership in the world, institutions such

as the World Bank, the IMF were important in preventing the world from

dividing into different blocs. It has character.”

The IMF managing director said that policymakers should play an

important role in protecting the interests of their citizens. “If we do

not show realism, people everywhere will be in a bad situation. There is

a possibility of a 7% drop, the distribution of global trade has

increased due to Brexit, the US trade war, China and the Ukraine

conflict.”

Since early February, Pakistan has been negotiating with the IMF to

revive the $7 billon bailout programme to secure $1.1 billion tranche.

Pakistan hopes that the deal will also unlock funds from other donors

waiting for IMF’s endorsement.

Later at a news briefing in Washington, Kristalina Georgieva said “My

hope is that with the goodwill of everyone, with the implementation of

what has been already agreed by the Pakistani authorities, we can

complete our current programme successfully.”

She pointed out that the Fund’s projected global 2.8 percent in 2023 was

“the weakest medium-term forecast in decades”. The growth will remain

weak, at around 3pc, over the next five years, she added.

“Underlying inflation remains stubbornly high, geo-economic

fragmentation affects trade and capital flows, and downsides risks have

increased,” she warned. “Fighting inflation and safeguarding financial

stability have become more complex with the recent banking sector

pressures.”

Responding to a question about the impact of climate change on

Pakistan’s economy, Ms Georgieva said in 2011 she had the opportunity to

see what climate change meant for the people of Pakistan. “And I know

that (last summer’s) flood is much more dramatic than the one I

witnessed,” she added.

“No question Pakistan will continue to be on the frontline of the

climate crisis. And that means that communities also think about the

future of agriculture in a more climate sustainable manner,” she said.

Responding to a question about IMF-Pakistan talks for the revival of the

2109 loan package, Ms Georgieva said: “We have been working very hard

with the authorities in Pakistan within the context of our current

programme to make sure that Pakistan has the policy framework that makes

it possible to avoid what you are talking about.”

The reporter who asked the question had hinted at the possibility of

Pakistan’s burgeoning debt becoming unsustainable. But Ms Georgieva said

the purpose of the IMF-Pakistan talks was to avoid getting to a point

where the country’s debt may become unsustainable. “We are not there yet

and it’s better not to get there,” she said.

The IMF and Pakistani officials, she said, were also discussing how to

support Pakistan “in terms of providing financial assurances so we can

complete the programme”.

She also said that the IMF is in discussions with friendly countries of

Pakistan to provide financial assurances to complete the programme,

expressing hope that with everyone’s goodwill and the implementation of

what has been agreed upon by Pakistani authorities, the current

programme can be completed successfully.