Finance Minister Ishaq Dar has said that Pakistan has “fulfilled all the conditions” of the International Monetary Fund (IMF), hoping to sign the staff-level agreement with the fund soon.
The minister made the announcement while speaking to Geo News.
Both parties were engaged in tough talks for the last few months to reach a consensus on multiple conditions.
He confirmed that both Saudi Arabia and the United Arab Emirates (UAE) would provide $3 billion to Pakistan. Both Arab countries have also informed the aforementioned commitment to the IMF.
Riyadh would provide $2 billion while Abu Dhabi has promised $1 billion to Pakistan, Dar said.
Moreover, he said that all conditions of the staff-level agreement between Pakistan and IMF have been fulfilled.
“Pakistan is hopeful that IMF will soon sign the SLA and get it approved by its Executive Board,” Ishaq Dar added.
Earlier, China on Friday released $300 million to Pakistan – the last tranche of a $1.3 billion rollover loan, Dar had said.
Pakistan’s economy has crumbled alongside a simmering political crisis, with the rupee plummeting and inflation at decades-high levels, while devastating floods and a major shortage of energy have piled on further pressures.
Year-on-year inflation hit 35.37 per cent in March – the highest in nearly five decades – while the average inflation rate for the past year was 27.26 per cent.
The South Asian nation’s enormous national debt – currently $274 billion, or nearly 90 per cent of gross domestic product – and the endless effort to service it makes Pakistan particularly vulnerable to economic shocks.
Pakistan’s bonds, which have slumped nearly 70% over the last year as the country’s troubles have mounted, climbed for a second day running on the confirmation. The rise was almost 5% for its bond with closest payment date - April 15 next year - taking it to almost 50 cents in the dollar, compared to 46 cents a few days ago.
On Thursday, the IMF’s managing director, Kristalina Georgieva, said the fund was also in talks with nations friendly to Pakistan to secure financial assurances vital for the programme.
Last week, Saudi Arabia also told the IMF it would provide financing of $2 billion to Pakistan.
Pakistan’s foreign exchange reserves have fallen to cover barely a month of imports after the IMF funding stalled in November, hit by snags over fiscal policy adjustments after officials of the lender visited Islamabad in February for talks.
Pakistan had to complete actions demanded by the IMF, such as reversing subsidies in its power, export and farming sectors, hikes in the prices of energy and fuel, and a permanent power surcharge, among other measures.
These steps included jacking up its key policy rate to an all-time high of 21%, a market-based exchange rate, arranging for the external financing, and raising more than Rs170 billion ($613 million) in new taxes.
The fiscal adjustments have already fuelled Pakistan’s highest inflation ever, which climbed in March to more than 35% on the year.
A final issue to be resolved is a fuel pricing scheme meant to bring relief to Pakistan’s lower middle class and poor from crippling inflation. The IMF has asked how it will be funded.
The IMF programme will disburse another tranche of $1.4 billion to Pakistan before it concludes in June.
