Pakistan seeks assurance from Saudi Arabia to unlock IMF deal

Islamabad [Pakistan], March 6 (ANI): Pakistan is seeking confirmation from Saudi Arabia for securing additional deposits of USD 2 billion and a USD 950 million loan programme from the World Bank and Asian Infrastructure Investment Bank (AIIB) for the signing of a Staff-Level Agreement (SLA) with the International Monetary Fund (IMF) within the coming week, reported Geo News.

“We are hopeful,” a government official dealing with the IMF replied when asked about the development. Saudi deposits nod is crucial for clinching the IMF deal as Pakistan facing difficulty in its talks with IMF due to China-US hostility and IMF is reluctant to give any time frame for finalising the deal while the country is in economic chaos, reported Geo News.

The World Bank’s Resilient Institution for Sustainable Economy (RISE-II) has offered AIIB lending of USD 950 million only if Pakistan secures the IMF bailout.
China had already re-financed two commercial loans of USD 1.2 billion in two instalments, USD 700 million and USD 500 million. Now two more instalments of USD 500 million and USD 300 million would be re-financed by Chinese commercial banks in the coming days.

China has come forward to rescue Pakistan at a very difficult time as Beijing re-financed its commercial loans prior to the signing of the agreement with the lender, reported Geo News. “It’s a great help from the Chinese friends and Islamabad expects that they will also roll over the deposits in the coming weeks,” said official sources.

Pakistan is eyeing to jack up its foreign exchange reserves up to USD 10 billion by the end of June 2023 which, at the moment, stood at around USD 4 billion after getting two instalments of commercial loans from Chinese banks, reported Geo News.
Pakistan had implemented all prior actions to secure the revival of the IMF programme in order to accomplish the pending ninth review and release of the vital USD 1 billion tranches under the Extended Fund Facility (EFF) signed in 2019 by the Imran Khan government.

Under the prescription of the IMF, the government had taken a number of measures, including the unveiling of a mini-budget for fetching additional tax revenues of Rs 170 billion by raising the GST rate from 17 per cent to 18 per cent, raising power tariff by over Rs 7 per unit, another imposition of power surcharge of Rs 3.82 per unit, increasing gas tariff, allowing massive adjustment in the exchange rate, increasing petroleum development levy and hiking policy rate by 300 basis points, jacking it up from 17 per cent to 20 per cent, reported Geo News.