Pakistan Says IMF Excluded from Bond Markets

The Pakistani government is failing to secure financing from the global bond market and commercial banks, which makes it even more important to secure an agreement with the International Monetary Fund, Finance Minister Miftah Ismail said, according to Bloomberg.

Pakistan’s dollar-denominated bonds hit a record low this month after the government raised fuel prices, a key benchmark for the IMF to continue its lending program. Pakistan is seeking a staff agreement with the Fund in June.

“All roads lead to the IMF,” Ishmael told a virtual conference on Saturday. “Saudi Arabia and other countries are all ready to give money, but everyone tells them we have to go to the IMF first.”

Former Prime Minister Imran Khan cut and froze fuel prices, delaying a $ 6 billion bailout. Shehbaz Sharif’s successor, who took office in April, has banned imports of luxury goods and the central bank has raised borrowing costs more than expected this month to address imports that are as high as ever.

Pakistan needs about $ 36 billion to $ 37 billion in funding for the fiscal year beginning in June, Ismail said. An agreement with the IMF would help raise funds from other sources, such as the World Bank and friendly nations, including China.

Ismail ruled out raising funds from the global bond market and foreign commercial banks that have provided short-term loans in the past. The decision was made after the nation reportedly selected JPMorgan Chase & Co., Citigroup Inc., Standard Chartered Plc and Credit Suisse Group AG to manage any bond sales.

The funding will help Pakistan increase its foreign exchange reserves to about $ 15 billion next fiscal year from about $ 10 billion. Pakistan’s $ 3.2 billion in debt, which expires this year, the highest level in a decade, according to data compiled by Bloomberg.

Pakistan’s financing needs will be comfortable if the nation secures the IMF’s program, acting central bank governor Murtaza Syed told investors and analysts last week.