ISLAMABAD: Pakistan is likely to receive a multibillion-dollar bailout package from longtime ally Saudi Arabia this month, two sources said, stalling the country’s ninth review of its $7 billion IMF bailout. done
The two finance ministry officials said the Saudi package would include increasing the country’s foreign reserves and oil on deferred payments.
Finance Minister Ishaq Dar earlier said that he hoped that talks with Saudi Arabia would be held soon.
“We are expecting, God willing, we will get financial support from Saudi Arabia, probably this month,” a senior official told JEE News, adding that it would be a package of about $4 billion.
“Some of this package will go to our reserves and the rest to oil and some other commodities on deferred payments,” he said.
“Pakistan has brotherly relations with Saudi Arabia. Both countries have helped each other in times of need,” a finance ministry media official told JEE News without giving further details.
Pakistan’s economy is facing a balance of payments crisis. Central bank reserves fell to $6.7 billion, barely enough to cover one month’s worth of imports.
The fiscal deficit has already touched 1 percent of GDP in the first quarter of the current fiscal year against the 0.7 percent of GDP agreed with the IMF.
Exceptional
With the IMF’s ninth review pending since September, Pakistan is scrambling to secure financial assistance to meet its external payment obligations for the current fiscal year.
Before the review, Pakistan was trying to approach allies for financial support, and Dar said he would expect to receive $3 billion from a friendly country.
“The IMF has sought more information to complete the ninth review,” Dar said on Monday, adding that it was “unusual” as Islamabad had already met all the requirements.
He said the IMF wanted Pakistan to explain how the country would pay for the reconstruction and recovery costs of the devastating floods, which were estimated to cost more than $30 billion in damages this summer.
The minister and the IMF have said that discussions on the review continued online. There is no date yet for a physical review by the IMF.
The IMF approved the seventh and eighth reviews of Pakistan’s bailout program simultaneously in 2019, allowing the release of more than $1.1 billion.
Pakistan received a $6 billion bailout in 2019 with another $1 billion earlier this year.
