The International Monetary Fund (IMF) is set for a key executive board vote on Pakistan’s $3 billion bailout program today, a person familiar with the matter told JEE News.
Islamabad on June 30 signed a short-term IMF agreement under a standby arrangement, under which the nation will receive $3 billion over nine months, subject to approval by the IMF’s board.
Tahir Abbas, head of research at Arif Habib Limited (AHL), said: “I hope [the IMF’s board] will discuss and approve the loan.”
“After getting the board’s approval, Pakistan will get $1.1 billion in three to four days,” Abbas added.
Since then, Pakistan’s external financing environment has improved as Fitch Ratings Inc. This week upgraded the downgraded country by one notch in its CCC long-term foreign currency issuer rating.
Saudi Arabia has also deposited $2 billion in an account with the State Bank of Pakistan (SBP), Finance Minister Ishaq Dar confirmed on Tuesday, a major development to ease the country’s financial crisis.
With sky-high inflation and foreign exchange reserves barely enough for a month of controlled imports, analysts say Pakistan’s economic crisis could escalate into a default in the absence of an IMF bailout.
Fitch’s statement said the upgrade reflected the country’s improved external liquidity and funding conditions following the SLA with the IMF, but warned that the fiscal deficit remained wide.
After the IMF agreement, Pakistan can now open up other external financing.
In the plan sent to the lender, sources in the finance division said Pakistan had arranged $3.5 billion in bilateral funds from China, $2 billion from Saudi Arabia and $1 from the United Arab Emirates.
On the multilateral side, Pakistan aims to get $500 million from the Asian Development Bank, $500 million from the World Bank and $3 billion from the IMF.
Local authorities expect $25 billion in gross new external financing in FY24, compared with $15 billion in public debt maturities, including $1 billion in bonds and multilateral lenders, Fitch said. 3.6 billion dollars are included for
The South Asian nation has also witnessed intense political uncertainty since former Prime Minister Imran Khan was ousted by a no-confidence motion in April last year.
To ensure that the program’s measures are implemented before the elections in October, the lender’s team met with all mainstream political parties to seek support and consensus for the SBA.
Khan’s Pakistan Tehreek-e-Insaf said he supported the deal.
