Islamabad (IANS): The Pakistan government has announced its decision to approach the International Monetary Fund (IMF) for balance-of-payments support and enter into a stabilisation programme, the media reported on Tuesday.
Finance Minister Asad Umar left for Indonesia on Monday night to participate in the annual meetings of the IMF and World Bank at Bali, scheduled to run until October 12, and formally request a bailout programme, reports Dawn news.
"The government has decided to approach the IMF for stabilisation and an economic recovery programme," said the Finance Ministry in a statement after the stock market suffered an over 1,300-point plunge, losing almost 270 billion Pakistani rupees ($2 billion) of its capitalisation - the highest single-day loss in a decade.
The market capitalisation is estimated to have shrunk by almost half a trillion rupees during the current month as the 100-index dropped to a 10-month low.
The decision to seek a bailout comes after Prime Minister Imran Khan sought alternatives to the IMF, but without success.
Pakistan had a trade deficit of $17.99 billion in the last financial year (July 1, 2017 to June 30, 2018), which was $12.4 billion in 2016-17 and $4.9 billion the year before that, according to Pakistan Bureau of Statistics.
The country's fiscal deficit stands at 6.6 percent of its gross domestic product.
Pakistan's foreign currency reserves have fallen to $9 billion, half of what they were two years ago, according to the State Bank of Pakistan, despite GDP growth of 5.8 percent, the highest in a decade, reports Efe news.
The situation is similar to 2013, when after the elections, the new government in Pakistan obtained $5.3 billion from the IMF to reinvigorate its ailing economy.
Pakistan paid back the loan in October last year, marking the first time in its history it repaid the IMF in full.
If the negotiations are a success, it would be the 13th IMF package for Pakistan.