The Pakistani currency is falling as uncertainties over IMF bailout loom

Pakistan will require $36 billion to $37 billion in finance for the fiscal year beginning in June, according to Finance Minister Miftah Ismail. This year’s funding gap, according to Morgan Stanley, could be as high as $8 billion. The need for an IMF rescue has grown urgent, since countries who have traditionally been generous lenders are now treading more carefully.

“Pakistan’s funding requirement for the upcoming year will be met, but it’ll be pretty tight, and that will keep the rupee under pressure,” said Saad Khan, head of research at IGI Securities Ltd. in Karachi.

The rupee is expected to fall to 220 per dollar by the end of the year, according to IGI and Ismail Iqbal Securities Pvt.

In June, Pakistan hopes to reach an agreement with the fund at the staff level to unlock the remaining $3 billion from its loan programme. It has also asked for a $2 billion increase in the loan size. According to Bloomberg data, it has $3.2 billion in debt due this year, the greatest amount in the next decade.

“The currency could start to stabilize over the near-term with risk-on sentiment, but we still expect it to weaken over the longer-term,” said Raphael Mok, head of Asia country risk at Fitch Solutions in Singapore. “Pakistan is still running a significant current-account deficit, and will remain dependent on external financing conditions.”