Pakistan PM leaves for Saudi Arabia amid bailout speculation

FILE PHOTO: Cricket star-turned-politician Imran Khan, chairman of Pakistan Tehreek-e-Insaf (PTI), speaks after voting in the general election in Islamabad, Pakistan July 25, 2018. REUTERS/Athit Perawongmetha/File Photo

ISLAMABAD (Reuters) - Pakistani Prime Minister Imran Khan left for Saudi Arabia on Tuesday, the foreign office said, amid speculation he may be seeking economic assistance from a staunch ally instead of another IMF bailout.

Khan, on his first international visit since taking office last month, was accompanied by Finance Minister Asad Umar and Foreign Minister Shah Mehmood Qureshi at a time when the country is trying to avert a balance of currency crisis stemming from a large current account deficit.

Analysts say a fresh bailout package from the International Monetary Fund, which would be its 13th since late 1980s, is inevitable.

But Umar recently said an IMF rescue was a “fallback option” and that the government was exploring other avenues for assistance, which was broadly interpreted as Islamabad seeking help from China and Saudi Arabia, both of which have provided vast loans in the past.

“The Prime Minister will call on His Majesty King Salman and hold a bilateral meeting with the Crown Prince,” Pakistan’s foreign office said in a statement. “The two leaders will discuss issues of bilateral interest.”

In 2014, six months after Pakistan obtained its last IMF bailout, Saudi Arabia loaned Pakistan $1.5 billion, which the government used to strengthen its rupee currency.

Pakistan’s current account deficit widened 43 percent to $18 billion in the fiscal year that ended June 30, while the fiscal deficit has ballooned to 6.6 percent of the economy.

Khan’s government came to power on the back of populist assurances to root out corruption and reduce poverty. Since taking office, the government has initiated a number of symbolic austerity measures while promising social welfare reforms.

The government on Tuesday announced tax increases for middle and high-income earners and a spike in import duties on luxury products in a bid to raise 183 billion rupees($1.48 billion) in additional revenue.

Writing by Saad Sayeed