ISLAMABAD: Saudi Arabia has told the International Monetary Fund it will provide financing to Pakistan, junior finance minister Aisha Ghaus Pasha said on Thursday, a critical step needed to secure IMF funding.

Saudi Arabia’s $2 billion pledged in external financing support to Pakistan is one of the final conditions for an IMF deal that Islamabad needs to avert a default.

“Apparently Saudi Arabia has committed to IMF, and IMF has indicated to us that there has been a correspondence from them,” Pasha told reporters in Islamabad.

The IMF’s resident representative did not immediately respond to a Reuters request for a comment. Saudi Arabia’s finance ministry was not available for comment.

Pakistan’s international bonds rose around 1 cent on Friday to trade between 34 cents and 45 cents in the dollar - their strongest level in around a week, data from Tradeweb showed.

The IMF has asked Pakistan to secure assurances on external financing from friendly countries and multilateral partners to fund its balance of payment gap for this fiscal year, which ends in June.

Islamabad has been hosting an IMF mission since early February to negotiate a series of policy measures to secure $1.1 billion funding for the cash-strapped economy, which is on the verge of collapse.

The funds are part of a $6.5 billion bailout package the IMF approved in 2019, which analysts say is critical for Pakistan to avert defaulting on external payment obligations.

The deal will also unlock other bilateral and multilateral financing avenues for Pakistan to shore up its foreign exchange reserves, which have fallen to four weeks worth of import cover, and help it steer out of a balance of payment crisis.

Pasha said Islamabad was also in talks with UAE to secure an assurance for a foreign reserves deposits in central bank.

Forex reserves fall $36m to $4.21b

Pakistan’s foreign exchange reserves fell by $36 mln to $4.207 billion in the week ending March 31 due to debt repayments, the central bank said in a statement.

Total liquid foreign reserves held by the country stood at $9.759 billion, it added.