- Washington-based lender wants to ensure Riyadh follows through with as much as $4bn funding to Pakistan
The International Monetary Fund (IMF) is looking to assess Saudi Arabia’s commitment to financing Pakistan before the multilateral lender disburses fresh funds to the country, Bloomberg reported, citing people familiar with the matter.
The Washington-based lender wants to ensure that Saudi Arabia will follow through with as much as $4 billion in funding to Pakistan to ensure Islamabad does not have a financing gap after the IMF loan, the report added, citing the people who asked not to be identified discussing private deliberations. The transfer could include special drawing rights, the Bloomberg report added.
The development comes as Pakistan desperately seeks fresh funds, including those from the IMF, to help manage a worsening economic crisis that has seen the rupee hit fresh lows throughout the ongoing week.
Many believe the IMF's $1.2 billion alone is not sufficient for Prime Minister Shehbaz Sharif’s government to avoid a debt default.
The report coincides with Pakistan’s bonds also sinking, effectively making international markets too expensive for the government.
Pakistan needs at least $41 billion in the next 12 months to fund debt repayments and boost foreign exchange reserves, Finance Minister Miftah Ismail had said earlier.
Just days ago, Miftah said Pakistan is likely to get $4 billion from friendly countries this month to bridge a gap in foreign reserves highlighted by the IMF, two days after sealing a deal with the lender.
"We will, God willing, fill this gap in the month of July," he had said. "We think that we will get $1.2 billion in deferred oil payment from a friendly country. We think that a foreign country will invest between $1.5 to $2 billion in stocks on a G2G (government-to-government) basis, and another friendly country will perhaps give us gas on deferred payment and another friendly country will make some deposits."
The IMF announced its staff-level agreement with Pakistan on July 16, a development that paves the way for a disbursement of $1.17 billion, subject to approval of its board.