Washington: Pakistan has forfeited the final USD 3.7 billion tranche of an IMF loan package after turning down the agency's demands for carrying out strict reforms.
The country's Finance Minister Abdul Hafeez Shaikh said Islamabad had refused to take the final tranche as conditions laid down by the IMF were "too tough" and instead would pursue a homegrown fiscal reform programme.
Islamabad negotiated a USD 11.3 billion loan package from the IMF three years ago to avoid a balance of payment crisis, but disagreements over the fiscal management led to the programme's effective suspension at the end of last year.
Pakistan's refusal of a bailout by the Washington-based fund comes at a time when IMF has forecast that the country will post a meagre growth of 2.6 percent in 2011, among the lowest in Asia.
In an interview to the paper, Shaikh said after undertaking a "joint assessment" with the IMF, Pakistan had decided not to negotiate a new programme and would instead go ahead with its own reform programme.
He argued that a "resilient" Pakistani economy, growing at about 3.5 percent this year, did not require IMF lending. Pakistan had previously signalled that it could approach China, with which it has an increasingly close relationship, for financial aid.
Adnan Mazarei, the IMF's Mission Chief for Pakistan, is expected to lead an IMF delegation to Islamabad on November 10, even as Paul Ross, the IMF's representative in Islamabad, is likely to return to Washington.
Pakistan's economy has been blighted by energy shortages, high military spending and revenue shortfalls and business leaders are concerned that reform efforts will stall as the ruling PPP prepares for Parliamentary elections, due within the next 18 months.
The end of the IMF programme means Pakistan will have to start repaying its loan early next year, with the first USD 1.2 billion payment likely to eat into the country's USD 18 billion in foreign reserves.