Pakistan will initiate talks with the International Monetary Fund on a possible aid package to address its widening current account deficit and low foreign exchange reserves, Reuters reported, citing the country's finance ministry.
Finance Minister Asad Umar is expected to meet with officials at an annual conference of the IMF and the World Bank in Bali, Indonesia, this week. The ministry did not specify how much emergency funding it would seek, but Umar had earlier said the government would need at least $8 billion to pay for its external debt through 2018-end, Reuters reported.
Pakistan's current account deficit widened 43% to $18 billion in the fiscal year ended June 30, while the fiscal deficit reached 6.6% of GDP, Reuters said. The country's foreign-currency reserves fell to $8.4 billion in late September.
The decision to tap the IMF was taken by new Prime Minister Imran Khan, who had previously sought alternatives to an IMF bailout. Pakistan has received 12 bailouts from the IMF since the late 1980s and completed its last loan program in 2016.
Meanwhile, the IMF's chief economist said Pakistan has not yet formally approached the organization, adding that the IMF would push for reforms to aid the South Asian country should bailout talks kick off this week.
"The government has expressed its desires to enact deep structural reforms that might break the cycle of Pakistan needing financial support from the [IMF]," Maurice Obstfeld, who will be succeeded by Gita Gopinath in 2019, reportedly said.
The Pakistani rupee plunged 3.30% as of 3:19 a.m. ET on Oct. 9.
As of Oct. 8, US$1 was equivalent to 124.26 Pakistani rupees.