By Staff Reporter
ISLAMABAD: Pakistan is anticipating an additional $1 billion deposit from the United Arab Emirates (UAE) as it moves towards a staff-level agreement (SLA) with the International Monetary Fund (IMF), following confirmation of $2 billion in additional deposits from the Kingdom of Saudi Arabia, according to local media reports on Wednesday.
The IMF has informed Pakistani authorities that it has secured confirmation of the provision of $2 billion in additional deposits from the Kingdom of Saudi Arabia, and the Fund staff seem largely satisfied with this latest confirmation. The Saudi authorities are expected to make a public announcement, possibly during the upcoming visit of Prime Minister Shehbaz Sharif to the Kingdom.
Pakistan and the IMF have been negotiating since early February on an agreement that would release $1.1 billion to the cash-strapped, nuclear-armed country with a population of 220 million people. The funding is crucial for Pakistan to unlock other external financing avenues to prevent a default on its obligations, with its central bank reserves falling to a level that can hardly cover four weeks of imports.
The IMF has recently stated that assurance from multilateral donors and bilateral partners like China, Saudi Arabia, and the UAE to fund the balance of payment gap is a prerequisite for securing the bailout deal.
China, Pakistan’s longtime ally, has already rolled over a $2 billion loan on March 23, providing relief during the South Asian nation’s acute balance of payment crisis.
Saudi Ambassador Nawaf bin Said Al-Malki earlier this week said the Kingdom would support Pakistan when journalists asked about the IMF wanting external financing commitments from friendly countries fulfilled before it released bailout funds for the crisis-ridden South Asian nation.
“We will god willing support Pakistan,” the Saudi ambassador in Islamabad told reporters last Monday. “Saudi Arabia and Pakistan are like brothers, we always support Pakistan in critical situations … God willing, I hope we will be hearing good news.”
The government is also expecting to receive another $1 billion deposit from the UAE next week to close the ink on the staff-level agreement.
However, another stumbling block to signing the SLA with the IMF is the Ministry of Petroleum’s announcement of an unbudgeted fuel subsidy for motorcyclists and car owners up to 800cc, which needs to be scrapped at this stage.
Minister for Finance Ishaq Dar is scheduled to lead an official delegation to attend the upcoming annual spring meetings of the IMF and World Bank, but meetings with bilateral and multilateral partners on the sidelines of Breton Wood Institutions (BWIs) are yet to be finalized and confirmed.
It remains to be seen how Pakistan and the IMF will move forward with the completion of the Extended Fund Facility (EFF) program, even if the pending 9th Review is accomplished, as the existing EFF program will expire on June 30, 2023.
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