ISLAMABAD: In a bid to unlock the much-awaited International Monetary Fund (IMF) programme, the government on Tuesday shared its plan with the lender for securing an additional $3 billion to bridge the financing gap, Geo News reported citing sources.
Last week, Nathan Porter — the Fund’s mission chief for Pakistan — said that the Fund was seeking “necessary” financing assurances at the earliest to conclude talks with Pakistan on its stalled $6.5 billion bailout.
The IMF had asked Pakistan to arrange $6 billion in external financing — a sum that the struggling $350 billion economy needed from now till June to avoid default.
It should be noted that the $6 billion financing gap had been worked out on the assumption that the current account deficit would remain around $7 billion in the current fiscal year.
The IMF welcomed “the recent announcement of important financial support to Pakistan from key bilateral partners”, indirectly confirming the United Arab Emirates and Saudi Arabian commitments. But these commitments are short of Pakistan’s requirements.
According to sources, Islamabad has informed the Washington-based lender about its plan to secure a $450 million worth second Resilient Institutions for Sustainable Economy (RISE-II) budget support loan.
While plans to get $1 billion from Asian Infrastructure Investment Bank (AIIB) and other commercial banks were also shared with the Fund officials along with plans to materialise pledges secured at the Geneva moot.
The sources added that once the staff-level agreement is signed with the IMF it would become easy for Pakistan to secure financing.
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.
The fiscal policy adjustments formed part of a ninth review exercise on a bailout package agreed upon in 2019 whose resumption is critical for Pakistan to avoid risking default on external payment obligations.
The IMF programme will disburse another tranche of over $1 billion to Pakistan before it concludes in June. While funds from the lender will also unlock other bilateral and multilateral financings for the cash-strapped country.
Programme loans from other multilateral agencies await completion of the IMF review, central bank governor Jameel Ahmad told investors in Washington at the spring meetings of the lender and the World Bank.
Ishaq Dar-led Ministry of Finance is now awaiting a response from the IMF officials regarding the next step.