IMF team arriving in Pakistan for bailout review, sources say

Credit: REUTERS/Denis Balibouse

By Asif Shahzad and Ariba Shahid

ISLAMABAD, March 13 (Reuters) - An International Monetary Fund (IMF) mission is arriving in Pakistan on Wednesday for a second and last review of a $3 billion standby arrangement, two sources said.

The four-day review begins on Thursday, said the two finance ministry officials, who were speaking on condition of anonymity because they were not authorised to disclose the information.

Islamabad secured the last-gasped rescue package last summer to avert a sovereign default.

The last review, if successful, will release a tranche of around $1.1 billion.

Prime Minister Shehbaz Sharif has already directed his finance team, headed by newly installed Finance Minister Muhammad Aurangzeb to initiate work on seeking an Extended Fund Facility (EFF) after the standby arrangement expires on April 11.

Aurangzeb told reporters that the team was arriving this week, without mentioning a date, according to the Dawn daily.

The lender has said it will formulate a medium-term programme if Islamabad applies for one.

Islamabad will be "very keen to start discussions on another EFF with them during these talks," the finance minister said, adding that further negotiations on the larger, longer programme would be taken forward on the sidelines of the IMF and World Bank's spring meetings in April in Washington.

During the review, he said, "We would at least kick-start the process and get this going. Let's see how they respond."

Aurangzeb, who was picked over several other aspirants, including former four time finance minister Ishaq Dar, has to bring stability to a country plagued by crippling boom-bust cycles that have in past led to more than 20 IMF bailout programmes.

The debt-ridden economy, which shrank -0.2% last year and is expected to grow around 2% this year, has been under extreme stress with low reserves, a balance of payment crisis, inflation at 23%, policy interest rates at 22% and record local currency depreciation.

(Reporting by Asif Shahzad in Islamabad and Ariba Shahid in Karachi; Editing by Raju Gopalakrishnan)

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