Debt-ridden Pakistan has shared its plan with the IMF to secure an additional USD 3 billion to meet the mandatory financing assurances laid by the global lender for it to release the country’s stalled bailout plan, it emerged on Wednesday.
The Washington-based global lender had asked Pakistan to arrange USD 6 billion in external financing but so far only USD 3 billion were arranged after Saudi Arabia agreed to provide USD 2 billion and the UAE pledged USD 1 billion. The USD 6 billion gaps had been worked out on the premise that Pakistan’s current account deficit would remain around USD 7 billion in the current fiscal year ending on June 30, The Express Tribune newspaper reported on Wednesday.
The Pakistan Muslim League-Nawaz (PML-N) led coalition government has informed the International Monetary Fund (IMF) about its plan to secure a USD 450 million worth second Resilient Institutions for Sustainable Economy (RISE-II) budget support loan, it said. The government has also shared its plans to get USD 1 billion from Asian Infrastructure Investment Bank (AIIB) and other commercial banks to materialise pledges secured at the Geneva moot.
The Geneva conference held in January this year pledged several billion dollars to help Pakistan combat the challenges of climate change. The global community of 40 countries committed a sum exceeding USD 10 billion for 2022 devastating floods causing around USD 30 billion in infrastructure and economic damages.
Official sources said that Pakistan asked the fund to give a nod to the agreement to release USD 1.1 billion out of a USD 7 billion bilateral program agreed upon in 2019, to make it easier to raise loans from the global market. Interestingly, all bilateral and multilateral donors and countries have also refused to provide loans to Islamabad until the IMF approved its agreement.
The IMF has put forward tough conditions during talks held in February and refused to approve a staff-level agreement to release funds. The Shehbaz Sharif government has expressed anguish and frustration at the rough conditions by the fund but has been forced to toe the line due to the fear of default.
The premier had earlier said that his country had fulfilled all “tough” conditions of the IMF for the staff-level agreement and that it should not delay in approving the agreement.But it is believed that the chances are slim and Pakistan would have to provide assurances that it would arrange USD 3 billion to bridge the financing gap.
Cash-strapped Pakistan and the IMF have failed to reach a staff-level agreement on the much-needed USD 1.1 billion bailout package aimed at preventing the country from going bankrupt. The funds are part of a USD 6.5 billion bailout package the IMF approved in 2019, which analysts say is critical if Pakistan is to avoid defaulting on external debt obligations.