Meeting IMF funding gap: One friendly country has already confirmed assurance, says Miftah

Finance Minister Miftah Ismail has said that “one friendly country” has confirmed its assurance of helping Pakistan in meeting what the International Monetary Fund (IMF) calls a funding gap, saying that an announcement will be made soon.

Miftah added another friendly country will also confirm its assurance in a day or two.

“I have conveyed this to the IMF that you can also contact these two friendly countries (for the assurance),” said Miftah in response to a question on Geo News show ‘Aaj Shahzeb Khanzada Kay Sath’ on Wednesday night.

Miftah’s statements come as the IMF conveyed that Pakistan, with the increase in petroleum development levy (PDL), has completed the last prior action for the combined seventh and eighth review, adding that the board meeting is tentatively planned for late August once adequate financing assurances are confirmed.

Pakistan has met last prior action, says IMF after govt increases petroleum levy

The Washington-based lender wants to ensure Pakistan would manage to secure $4 billion in additional funding to ensure Islamabad does not have a financing gap after the IMF loan.

“The IMF wants our reserves to increase by $6 billion, while the country has a financing gap of $4 billion,” said Miftah. “To fund the gap, we are in contact with friendly countries, and one of them has already confirmed its assurance. The other country will also confirm in a day or two.”

Miftah said the assurances would be complete much before the IMF board meeting, which is scheduled to meet in the last week of August. It has been reported that the IMF would announce the disbursement for Pakistan, once adequate financing assurances are confirmed.

Meanwhile, commenting on the recent movement in the currency, the minister added that the rupee has strengthened “organically” due to demand-and-supply factors.

“I have reiterated on a number of occasions that the economic situation would improve in August, as July statistics showed that the trade deficit declined by 35% on a monthly basis,” said Miftah.

The minister said that the import bill has declined to $4.92 billion. “As a result of this, inflows of dollars have increased as compared to the outflow. This has resulted in the improvement of market sentiment.

“The rupee has strengthened organically without any interference of the central bank, and the local currency would remain stable and appreciate,” he said.

Pakistani rupee witnessed a massive recovery on Wednesday as the local currency registered its biggest day-on-day increase against the US dollar in absolute terms to close at 228.8, an appreciation of Rs9.58 or 4.19% against the greenback in the inter-bank market. On Thursday, the rupee continued to appreciate in early-morning trading.

“I have learnt that the demand for dollars is low whereas the supply is greater, thus we would see improvement tomorrow as well,” he added.