By Staff Reporter
ISLAMABAD: Pakistan has received encouraging signals from China, Saudi Arabia, and the United Arab Emirates regarding their potential support for the country’s $7 billion International Monetary Fund (IMF) loan package, Finance Minister Muhammad Aurangzeb said on Friday, a crucial step towards unlocking the funding at the lender’s next month’s board meeting.
The finance minister’s comments followed the release of the IMF’s Executive Board meeting schedule until August 28, from which Pakistan’s name was absent.
The surprise move has raised concerns about the loan’s disbursement timeline and the possibility that the loan may be delayed, just as Pakistan’s economy is struggling to stabilize. A staff-level agreement between Pakistan and the IMF was reached on July 12, but the board’s approval is still pending.
The 37-month Extended Fund Facility program is designed to shore up Pakistan’s economy, boost foreign reserves, and tackle fiscal challenges. However, without the IMF board’s formal approval, the country’s financial outlook remains precarious.
The program is subject to approval from the IMF’s executive board and obtaining “timely confirmation of necessary financing assurances from Pakistan’s development and bilateral partners.” A $3-5 billion financing gap is still remain.
Pakistan is in talks with Saudi Arabia, the UAE, and China to meet to fill the gap. Rollovers and disbursements from allies have helped bridge financing gaps in the past.
The central bank expects rollovers of $16.3 billion in the fiscal year to June 2025 — more than half of the country’s $26.2 billion external financing requirement.
“The reaction from China, Saudi Arabia, and the UAE has been positive,” Aurangzeb told reporters in Islamabad. “Discussions are ongoing with Dubai Islamic and Al-Mashreq Bank. The discussion with the Saudi finance minister last week was also positive. Their response was positive due to the improvements in the country’s ratings by international agencies.”
Aurangzeb said Pakistan needs external financing of $3 billion over the 37-month IMF program, with $2 billion needed this year alone. “Rollovers or disbursements on loans from Pakistan’s long-time allies, in addition to financing from the IMF, have helped the country meet its external financing needs in the past,” the minister added.
Aurangzeb dismissed concerns about the delay in the package approval.
“Just like in the past, there is unnecessary noise about the staff-level agreement not being approved, but we are hopeful that the IMF board will approve it next month,” he added. “Like in the past, this time as well, the IMF board will greenlight the programme, hopefully in September. We are in discussions with the international lender every other day.”
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