Pakistan PM Sharif says another IMF bailout is inevitable

Sharif's comments came after the IMF approved an agreement with Islamabad to disburse the last tranche of $1.1 billion under the existing $3 billion arrangement

Pakistan's Prime Minister Shehbaz Sharif said on Thursday that a long-term bailout from the International Monetary Fund (MF) was inevitable given the South Asian country's broken economy.

Pakistan's Prime Minister Shehbaz Sharif (AFP/File)

The comments came a day after the IMF agreed a provisional or staff-level agreement with Islamabad which, if approved by its board, would disburse the last tranche of $1.1 billion under an existing $3 billion standby arrangement.

"We hope to get the $1.1 billion IMF tranche next month," he told a meeting in Islamabad that was broadcast live, adding: "We couldn't survive without yet another IMF programme."

With a long-term, two-to-three year IMF programme, he said, the $350 billion economy that has long been under extreme stress with a yawning balance of payment crisis would need deep-rooted structural reforms.

The IMF mission that visited Islamabad for five days on the last review of the stand-by programme said Pakistani authorities expressed interest in yet another bailout.

The stand-by arrangement expires on April 11. The lender has already said it would formulate a medium-term programme if Islamabad applies for it.

The government has not officially stated the size of the additional funding it is seeking under the long-term bailout. Bloomberg reported in February that Pakistan planned to ask for a loan of at least $6 billion.

It resulted in inflation rising as high as 38% last summer, a historic depreciation in the local currency and the economy contracting.