Pakistan approval from Gulf states IMF loan: As the International Monetary Fund (IMF) requires confirmation before granting the ninth review, Pakistan is turning to the Gulf governments that had pledged to cover the fiscal deficit, according to News.
According to the article, the IMF’s need that Pakistan to close the $6 billion shortfall is merely an effort to maintain its reputation. Pakistan might default if the plan doesn’t materialize.
All eyes are now on the UAE, Qatar, and the Kingdom of Saudi Arabia (KSA) to save Pakistan’s faltering economy.
Pakistan has no choice but to wait and pray for confirmation from its Gulf allies, according to an official who spoke to the journal on the condition of anonymity.
According to the report, the Fund was compelled to make this demand during negotiations partly because Executive Board members from these nations had already committed to giving Islamabad financial support in various forms before the acceptance of the seventh and eighth reviews. They comprised further investments and deposits.
Nonetheless, despite the fact that the current fiscal year has been going for a while, they have yet to fulfil their promises.
IMF warns Pakistan of default risk if bilateral partners fail to commit to staff-level agreement
According to sources speaking to News on Thursday, “in such a situation, the IMF has thrown the ball in Pakistan’s court to secure 100% commitment from bilateral partners before advancing towards the signature of Staff Level Agreement (SLA)”.
Failing to secure Pakistan’s commitment from its bilateral partners after finalizing the staff-level agreement could push the nation into a default situation and jeopardize its credibility, warned the Fund to Islamabad.
According to the publication, the Fund is trying to determine why Pakistan’s bilateral partners are unwilling to keep their previous promises. According to the sources, Islamabad can only benefit from the support of Saudi Arabia, the UAE, and Qatar in this situation if it wants to reach a staff-level accord.
By keeping its promises to refinance its commercial debts and roll over its SAFE deposits, only China had stepped forward to save Islamabad. Pakistan has asked for the $2 billion in SAFE deposits that were due to mature next week to be carried over.
Chinese cash
On Thursday, the finance minister, Ishaq Dar, announced that his team had completed all the necessary paperwork to secure a $500 million commercial loan from the Industrial and Commercial Bank of China (ICBC).
Ishaq Dar tweeted that the Finance Ministry has finalized the documentation for the release of money to the State Bank of Pakistan, which amounts to the second payment of $500 million. He further stated that Pakistan has already returned $1.3 billion of the approved rollover facility from Chinese ICBC in recent months.
Chinese commercial banks, such as China Development Bank (CDB) and ICBC, had previously refinanced commercial loans of $700 million and $500 million, respectively. The expectation is that they will refinance a further installment of $500 million either today or next week. There will be a total of $1.7 billion in refinanced commercial loans after receiving $500 million from the ICBC soon.
A few months ago, Pakistan repaid a total of $2 billion in commercial loans, and China promised that its commercial banks would refinance the debts.
The sources anticipate that the upcoming weeks will see the refinancing of the last payment on the $300 million commercial loan from the ICBC.
