IMF wants ‘more guarantees’ in fresh trouble for Pakistan

After assistance confirmation from Saudi Arabia and the United Arab Emirates, the International Monetary Fund (IMF) has sought more financing guarantees from Pakistan to release a tranche of $1.1 billion fund, GeoTV reported on Saturday. The IMF, which has withheld part of the bailout package for months, has asked Pakistan to arrange $6 billion in external financing. 

Also read: Pakistan is closer than ever to becoming a ‘zombie’ state, warns ex-govt advisor

The $6 billion financing gap had been worked out on the assumption that the country’s current account deficit would remain around $7 billion in the current fiscal year. So far, Islamabad has managed to secure a commitment of $2 billion from Saudi Arabia and $1 billion from UAE, reducing the required amount to $3 billion.

Also read: ‘Serious blow’: Chinese experts leave Pakistan as 30 mobile phone assembly units shut due to cash crunch

Currently, a Pakistani delegation of the finance ministry and the central bank is in Washington for the Spring meetings of the IMF and World Bank. They are also holding talks with the officials of the global lender regarding the revival of the loan programme.

IMF’s Mission Chief to Pakistan Nathan Porter said that during the meetings between the Pakistani delegation and IMF staff and management, there was agreement on the need to maintain strong policies and secure sufficient financing to support the authorities’ implementation efforts.

“The IMF is supporting these efforts and looks forward to obtaining the necessary financing assurances as soon as possible to pave the way for the successful completion of the 9th External Fund Facility review,” he said.

This came on the day Prime Minister Shehbaz Sharif said that his government had fulfilled all the conditions set by the global lender and that now it had no reason to delay the approval of the staff-level agreement after financial assurances from UAE and Saudi Arabia.

Sharif said the IMF had set a condition to arrange funds from friendly countries before it signed a staff-level agreement with Islamabad. “We put up an effort of one-and-a-half months to first have a rollover of $2 billion from China and then $3bn from Saudi Arabia and the UAE, thus meeting the last condition of the IMF,” he said.

Pakistan Finance Minister Ishaq Dar has been saying that the country is close to signing the deal with IMF. However, Yusuf Nazar a former banker and leading economic commentator from Pakistan, said Islamabad was unlikely to reach a staff-level agreement with the IMF in the next few weeks.

“Despite statements from the minister of finance, I maintain my view that Pakistan is unlikely to reach staff level agreement with the #IMF in the next few weeks,” he said. “The program ends in June and Pakistan will have to seek a new one but even the old one has not been completed yet. It immediately needs at least $3bn more. I doubt it can come through within the next few weeks or before June.”