Pakistan IMF bailout comes as foreign banks eye opportunity
The bidding for Pakistan’s power plant privatization shows that the country’s problems aren’t putting off foreign bankers.
News of Pakistan’s $6 billion loan deal with the IMF this week can be read in two ways: a country gaining direction and stability under a new government, or one in a desperate condition that has no choice but to do what a distant multilateral wants. But either way, the country is of increasing interest to foreign banks.
The IMF bailout has been a long time coming. Imran Khan, the prime minister who was elected last year, delayed approaching the multilateral for nine months while he sought other funds, successfully raising loans from Saudi Arabia, the United Arab Emirates and China.
A change of finance minister, and an apparent agreement to move to a market-determined exchange rate for the rupee, seems to have moved things forward; the appointment of Reza Baqir, a former IMF official, as the new central bank governor must also be considered relevant.
News of the badly-needed bailout in Pakistan – which, as the IMF says, is “facing a challenging economic environment, with lacklustre growth, elevated inflation, high indebtedness and a weak external position” – was welcomed by foreign banks, who are showing increasing interest in the country.