Citibank Urges Pakistan To Seek IMF Help To Avoid Default
Friday, August 29, 2008 at 10:08 am Under Business News 11 views
KARACHI:US-based Citibank has advised Pakistan to secure help from the International Monetary Fund (IMF) to avoid default on its foreign debt repayments in the face of an ongoing political crisis.
The report, “Pakistan: Could the Political Chaos Lead to Sovereign Default?” released in New York Wednesday, cited a rising chance of default over mounting political instability, dwindling foreign exchange reserves and the weakening Pakistani rupee.
“Pakistan perhaps now needs an IMF stabilization programme to manage the dire situation,” it said.
The bank said if Pakistan opted to default, it would have to reschedule all of its debt, which amounts to 2.6 billion dollars in self-issued bonds and 13.9 billion dollars in bilateral debt.
Such a rescheduling would undermine the country’s ability to attract foreign investment, which is desperately needed to support a ballooning trade deficit, the report said.
Citibank also said it expected the rupee’s fall to continue in light of government inaction and this week’s breakup of the government coalition, warning that if the currency continues slipping, Pakistan would be forced to reschedule its debt payment of around 500 million dollars due in February.
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