ISLAMABAD: The coalition government on Tuesday shared with the International Monetary Fund (IMF) its plan to seek an additional $3 billion to bridge the financing gap as it prepares to release the next tranche of debt to the lender. steps up efforts to persuade, JEE News reported citing sources.
The IMF is seeking “necessary” financial assurances as soon as possible to conclude talks with Pakistan over its stalled bailout, the fund’s mission chief for Pakistan, Nathan Porter, confirmed last week.
The IMF had asked Pakistan to arrange $6 billion in external financing, which is needed by June to avert a default on the $350 billion economy.
It should be noted that the work on the financing gap of 6 billion dollars was done on the assumption that the current account deficit will be around 7 billion dollars in the current financial year.
The IMF welcomed the “recent announcement of significant financial assistance to Pakistan by key bilateral partners”, indirectly confirming the commitments of the UAE and Saudi Arabia. But these promises are less than the demands of Pakistan.
According to sources, Islamabad has informed the Washington-based lender of its plans to secure a second Resilient Institution for Sustainable Economy (RISE-II) budget support loan worth $450 million.
Plans to secure $1 billion from the Asian Infrastructure Investment Bank (AIIB) and other commercial banks were also shared with fund officials along with plans to implement commitments made at the Geneva Moot.
Sources added that once the Staff Level Agreement is signed with the IMF, it will become easier for Pakistan to get financing.
Pakistan’s foreign exchange reserves have fallen to barely covering a month’s worth of imports after the IMF halted funding in November and later on monetary policy after the lender’s officials visited Islamabad in February for talks. Constraints were encountered on adjustment.
The fiscal policy adjustment is part of the ninth review exercise on the bailout package agreed in 2019, which is critical for Pakistan’s recovery to avoid the risk of default on external payment obligations.
The IMF will release another tranche of more than $1 billion to Pakistan before the program ends in June. Funding from the lender will also open up other bilateral and multilateral financing for the cash-strapped country.
Central bank governor Jameel Ahmed told investors at the lenders’ and World Bank’s spring meetings in Washington that program loans from other multilateral agencies are awaiting completion of an IMF review.
The Finance Ministry headed by Ishaq Dar is now waiting for the response of the IMF officials regarding the next step.
