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Pakistan is in an economic crisis - PM
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Foreign reserves down less than three weeks import cover
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Local currency at record low after being in free fall
(Updates with more comments from prime minister)
By Asif Shahzad
ISLAMABAD, Feb 3 (Reuters) - Pakistan Prime Minister
Shehbaz Sharif said on Friday the International Monetary Fund
was giving his country a "tough time" over unlocking stalled
funding from a $6.5 billion bailout at a time of "unimaginable"
economic crisis.
Hours after his remark, the Pakistani rupee hit a record low
against the U.S. dollar in a steep slide since last week.
"Our economic situation is unimaginable," the premier said,
adding the IMF visiting mission was giving Pakistan a "tough
time."
"The conditions we have to fulfil are beyond imagination," he said, but admitted that the country has no option but to accept them.
"You all know we are running short of resources," Sharif said, adding the country was "facing an economic crisis". He made the comments in a meeting of civil and military leaders in the northwestern city of Peshawar he chaired to prepare a response to Monday's mosque bombing that killed more than 100 people. He was speaking in the context of funds the country might need for any military or counter-terrorism response to the resurgent Islamist militancy. IMF's Pakistan representative did not immediately respond to a Reuters request for comment. FREE FALL The IMF mission is visiting Pakistan to discuss fiscal consolidation measures the institution needs from Pakistan to clear a 9th review of its Extended Fund Facility, aimed at helping countries facing balance-of-payments crises. Pakistan's central bank reserves at present stand at $3.09 billion, the lowest since 1998 and not enough to cover the cost of three weeks of imports.
The IMF's demands aimed at controlling the country's budget
deficit have led Pakistan to leave its currency to market based
exchange rates and raise fuel prices.
The Pakistani rupee fell by 1.9% to a record low of
276.58 per dollar in the inter-bank market on Friday, according
to the central bank.
The local currency has dropped 16.5% since the
artificial cap was removed last week to allow its value to be
decided by a market-based exchange rate.
The rupee also shed 2.65% against the U.S. dollar on the open market, according to the association of exchange companies.
An IMF delegation is in Pakistan to restart talks stalled
since November for $2.5 billion funds yet to be disbursed.
Despite the economic situation, Sharif said his country will
do whatever possible to fight militancy. "We will use all
resources in our capacity to fight this menace," he said.
(Reporting by Asif Shahzad in Islamabad; Additional Reporting
by Ariba Shahid in Karachi; Editing by Elaine Hardcastle, Louise
Heavens and Arun Koyyur)
