WASHINGTON: The International Monetary Fund (IMF) has announced it is seeking further assurances from Pakistan despite receiving confirmation from the UAE and Saudi Arabia regarding its $6 billion financing requirement.
The IMF has requested that Pakistan secures the sum of external financing from now until June to prevent default. The country’s foreign exchange reserves have been reduced, leaving only one month’s worth of imports due to a stalled IMF funding process.
The IMF is currently holding talks with Pakistani officials in Washington at the Spring meetings to discuss the revival of the loan programme.
Although Saudi Arabia has pledged $2 billion and the UAE has committed $1 billion to Pakistan, the IMF is still seeking further guarantees. The IMF has declined Pakistan’s request to reduce the external financing need to $5 billion due to an improvement in the country’s current account deficit.
The IMF’s Mission Chief to Pakistan, Nathan Porter, has welcomed the UAE and Saudi Arabia’s financial assistance, stating that the Fund backs the efforts of the Pakistani authorities.
A Pakistani delegation is currently attending the Spring meetings of the IMF in Washington, comprising top officials of the Ministry of Finance and the central bank.
IMF programme critical to Pakistan’s ability to avoid risking default
The IMF programme is critical to Pakistan’s ability to avoid risking default on external payment obligations. The IMF review must be completed before other multilateral financings can be unlocked for the cash-strapped country. The programme will disburse over $1 billion to Pakistan before it concludes in June.
The international lender’s Director of the Middle East and Central Asia Department, Jihad Azour, has stated that Pakistan is at a critical juncture and decisive actions are necessary to stabilise the economy.
The discussions between authorities and the IMF are ongoing, and it is important to address inflation and maintain macroeconomic stability in the country.
Despite the confirmation of financial assistance from the UAE and Saudi Arabia, the IMF remains cautious and seeks further guarantees before the successful completion of the ninth review.
