Pakistan is seeking a $6 billion bailout from an International Monetary Fund rescue package as it struggles with falling foreign reserves, a widening current account deficit, surging inflation and a plunging currency.
Islamabad has said its forex reserves have plunged to $10.3 billion so that they cover less than two months of imports.
“Talks with the IMF mission started today,” the finance ministry said in a statement, adding that Finance Minister Miftah Ismail and the acting governor of the State Bank of Pakistan would join the talks virtually.
A finance team has already headed to Doha for consultations with the IMF that are due to last until May 25 before the lender takes a decision, the ministry said.
The rupee weakened to about 198.39 to the dollar on Wednesday, the central bank said, a historic low that means it has lost almost a quarter of its value in the past year.
The finance minister requested a bigger IMF bailout package on a visit to Washington last month. Following that request, the IMF said Islamabad had agreed to roll back unfunded subsidies to the oil and power sectors.
The government that took over in April after the collapse of Imran Khan’s administration fears a backlash if it withdraws subsidies on which many Pakistanis rely. From March to June, Pakistan is expected to spend about $2 billion on subsidies.
About half of the existing package of $6 billion has been disbursed so far, but more recent payments were delayed several times due to IMF concerns about fiscal policy measures.
If the current review is successful, Pakistan will receive more than $900 million, which will help unlock other external financing.
- Reuters with additional editing by George Russel