On Friday, Pakistani Finance Minister Ishaq Dar said that the UAE had assured the International Monetary Fund (IMF) that it would provide Pakistan with financial support worth $1 billion to help avoid Islamabad defaulting on its debt.
He added that the State Bank of Pakistan will now engage with the UAE to secure the “needful documentation” to secure the deposit.
IMF Discussions
The UAE’s assurances will help Pakistan negotiate with the IMF, as Islamabad seeks to revive the $7 billion bailout programme and secure the $1.1 billion tranche. The discussions for this loan have been stalled since December.
The IMF’s talks are critical for Pakistan to begin its economic recovery, which was further complicated by last year’s floods. In addition, its foreign reserves have plummeted to around $4 billion, just about enough for one month’s worth of imports.
IMF program — 9th Review Update:
— Ishaq Dar (@MIshaqDar50) April 14, 2023
UAE authorities have confirmed to IMF for their bilateral support of US $ One billion to Pakistan.
State Bank of Pakistan is now engaged for needful documentation for taking the said deposit from UAE authorities.
AlhamdoLilah!
According to Pakistani PM Shehbaz Sharif’s statement in March, the IMF wanted commitments of external financing from friendly countries as a precondition for releasing the bailout programme funds.
Last week, Saudi Arabia gave the international financial institution a similar commitment of $2 billion. State Minister for Finance Aisha Ghaus Pasha said to the media that the IMF had confirmed the receipt of communication about the commitment from Riyadh.
Against this backdrop, IMF Managing Director Kristalina Georgieva said that the institution was hopeful about successfully completing the programme and working with Pakistani officials to ensure the same.
Out of Chinese Bank’s #ICBC approved facility of $1.3 billion (which was earlier repaid by Pakistan), State Bank of Pakistan would receive back third and last disbursement today in its account amounting to $ 300 million.
— Ishaq Dar (@MIshaqDar50) April 14, 2023
It will shore up forex reserves of Pakistan.
AlhamdoLilah!
She also said Pakistan had yet to reach a level where it faces a risk of default. However, she added that the country needed a “sustainable policy framework” to avoid this risk.
Assistance From China
Dar separately announced that Pakistan would receive $300 million from the Industrial and Commercial Bank of China. This is part of its previously approved facility of $1.3 billion.
On 3 March, the Chinese bank approved a $1.3 billion loan and made the first payment of $500 million on the same day. On 17 March, it dispatched the second $500 million to Pakistan.