- Finance minister says SBP now engaged with authorities over the required documentation
In a major development towards revival of the stalled bailout programme, United Arab Emirates (UAE) authorities have assured the International Monetary Fund (IMF) that they will provide $1 billion as bilateral support to Pakistan, said Finance Minister Ishaq Dar.
“UAE authorities have confirmed to IMF for their bilateral support of $1 billion to Pakistan,” Dar tweeted on Friday.
“The State Bank of Pakistan (SBP) is now engaged for needful documentation for taking the said deposit from UAE authorities,” he added.
Pakistan was required to give an assurance that its balance of payments deficit is fully financed for the remaining period of the IMF programme that has been stalled since November last year.
“Timely financial assistance from external partners will be critical to support the authorities’ policy efforts and ensure the successful completion of the review [with Pakistan],” Julie Kozack, the IMF’s Director of Strategic Communications, stated last month.
“Ensuring that there is sufficient financing to support the authorities is the paramount priority. A Staff Level Agreement (SLA) will follow once the few remaining points are closed,” she said.
Earlier this month, Saudi Arabia had assured the IMF it will provide a $2 billion loan to the South Asian country, according to Pakistan’s Minister of State for Finance Aisha Ghaus Pasha.
Months of political and economic turmoil, worsened by crippling floods last year and record inflation, has put Pakistan among countries facing a debt crisis.
Amid the situation, China agreed to refinance $2 billion, of which $1.7 billion has already been credited to Pakistan’s central bank. China last month also rolled over a $2 billion loan, providing relief during Pakistan’s acute balance of payments crisis.
But talks with the IMF for a delayed $1.1 billion loan tranche, part of the bailout agreed in 2019, have dragged on and foreign exchange reserves have fallen to less than four weeks of imports.