ISLAMABAD, April 18, 2023: The federal government has shared a plan for external financing of additional $3 billion with the International Monetary Fund (IMF) in a bid to revive the bailout programme stalled since November last.
One of the requirements under the Memorandum of Economic and Financial Policies (MEFP) between the IMF and Pakistan is related to the Net International Reserves (NIR), which can only by fulfilled after getting assurance from friendly countries to fund a balance of payment gap. Pakistan has assured the IMF that it would raise its dwindling foreign exchange reserves to $10 billion by the end of June.
The global lender wants Pakistan to get the assurance for $6 billion to fund this fiscal year’s balance of payments gap and avoid default.
Last week, the IMF welcomed the financial assurances from the United Arab Emirates and Saudi Arabia but it asked Pakistan to do more for external financing as the pledges were short of requirements.
Sources said the cash-strapped country had now informed the IMF that it was expecting $1 billion funds from the World Bank, Asia Infrastructure Bank and other commercial banks.
It was told that Pakistan would receive $450 million in wake of second Resilient Institutions for Sustainable Economy (RISE-II) budget support loan. The IMF was also informed that Pakistan was expected to receive funds committed by the international community at the Geneva moot.
Pakistan’s loan programme is yet to materialize months after it imposed additional taxes and increased energy prices and allowed free floating of currency to meet conditions laid forth by the IMF. The nation has missed multiple deadlines to revive the deal.
The economic turmoil could worsen if the IMF bailout is delayed further as foreign exchange reserves continue to deplete. Total foreign reserves stand at $9.82 billion with the State Bank of Pakistan holding only $4.24 billion, which is barely enough to cover three weeks of imports.