10-20-2008, 08:52 AM
<b>Pakistan May Seek Bailout From IMF to Avoid Defaulting on Debt </b><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->South Asia's second-largest economy, which has seen its foreign reserves plunge more than 74 percent to about $4.3 billion in the past year, is also seeking financial support from the World Bank and the Asian Development Bank, said Shaukat Tarin, financial adviser to the prime minister. <b>The country has $3 billion in debt servicing costs in the coming year. </b>
``They are going to have to bite the bullet and sign for the IMF,'' said David Fernandez, the Singapore-based head of emerging markets research at JPMorgan Chase & Co. ``It has to come now.''
Pakistan's first civilian government since 1999 is facing economic turmoil after the rupee plunged to an all-time low, the current account deficit widened to a record, and inflation jumped to a 30-year high. The nation, which only came off its last IMF program in December 2004, may need as much as $4.5 billion in loans to tide over the crisis, Tarin said.
``If I don't feel the comfort level with the multilateral agencies and our bilateral friends in three to four weeks, then I'll have to write to the IMF,'' Tarin said in an interview in Islamabad yesterday. A default is ``out of the question.''
<b>Standard & Poor's, doubting Pakistan's ability to repay debt, cut the long-term foreign-currency rating on Oct. 6 to seven levels below investment grade, and said it may lower it again. Moody's Investors Service lowered its credit outlook to negative on Sept. 23, citing a risk of ``missed repayments.'</b>'
<!--QuoteEnd--><!--QuoteEEnd-->
``They are going to have to bite the bullet and sign for the IMF,'' said David Fernandez, the Singapore-based head of emerging markets research at JPMorgan Chase & Co. ``It has to come now.''
Pakistan's first civilian government since 1999 is facing economic turmoil after the rupee plunged to an all-time low, the current account deficit widened to a record, and inflation jumped to a 30-year high. The nation, which only came off its last IMF program in December 2004, may need as much as $4.5 billion in loans to tide over the crisis, Tarin said.
``If I don't feel the comfort level with the multilateral agencies and our bilateral friends in three to four weeks, then I'll have to write to the IMF,'' Tarin said in an interview in Islamabad yesterday. A default is ``out of the question.''
<b>Standard & Poor's, doubting Pakistan's ability to repay debt, cut the long-term foreign-currency rating on Oct. 6 to seven levels below investment grade, and said it may lower it again. Moody's Investors Service lowered its credit outlook to negative on Sept. 23, citing a risk of ``missed repayments.'</b>'
<!--QuoteEnd--><!--QuoteEEnd-->