ISLAMABAD: Pakistan is looking towards Gulf states that had promised to bridge the financing gap as the International Monetary Fund (IMF) seeks confirmation before approving the ninth review.
According to the details, the IMF’s condition for Pakistan to bridge the gap of $6 billion is simply an attempt to ensure its credibility. Non-materialisation may result in Pakistan sliding into default.
Now, all eyes are on the Kingdom of Saudi Arabia (KSA), the UAE and Qatar to bail out Pakistan’s struggling economy.
An official, who spoke to the publication on the condition of anonymity, said Pakistan has the only option to wait and pray for getting confirmation from bilateral partners from the Gulf region.
As per the report, the Fund was forced to put forth this condition on the negotiating table largely because representatives of these countries on the Executive Board had made commitments before the approval of the seventh and eighth reviews for providing financial assistance to Islamabad in different forms. These included additional deposits and investments.
However, they failed to materialise their commitments despite several months passing in the current fiscal year.
“In such a scenario, the IMF has placed the ball in Pakistan’s court for securing 100% commitment from bilateral partners before moving towards the signing of Staff Level Agreement (SLA),” sources confirmed to The News on Thursday.
The Fund has informed Islamabad that its credibility would also be at stake if the staff-level agreement is finalsied and Pakistan fails to materlise its commitment from the bilateral partners, it might slide the country into the default zone.
As per the publication, the Fund wants to find the reasons why Pakistan’s bilateral partners are not willing to fullfill their earlier commitments. In such circumstances, the nod of Saudi Arabia, the UAE and Qatar can only help Islamabad in striking a staff-level agreement, said the sources.
Only China had come forward to rescue Islamabad by fulfilling its commitments on the re-financing of its commercial loans as well as the rollover of its SAFE deposits. Pakistan had made a request to roll over SAFE deposits of $2 billion that would mature next week.
Meanwhile, Finance Minister Ishaq Dar on Thursday announced that documentation for the disbursement of a $500 million commercial loan from the Industrial and Commercial Bank of China (ICBC) had been completed for the release of funds.
“Out of Chinese ICBC’s approved rollover facility of $1.3 billion (which was earlier repaid by Pakistan in recent months), documentation for second disbursement of $500 million has been completed by the Finance Ministry for release of funds to the State Bank of Pakistan,” Ishaq Dar tweeted.
Chinese commercial banks, including China Development Bank (CDB) and ICBC, had already re-financed commercial loans of $700 million and $500 million respectively in the recent past. Now, another installment of $500 million will be re-financed either on Friday (today) or next week. After getting re-financing of $500 million from the ICBC soon, there will be total re-financed commercial loans of $1.7 billion.
There was a total of $2 billion in commercial loans which were repaid by Pakistan a few months back, and there was a commitment from China its commercial banks would re-finance its loans.
“Now it is expected the last installment of $300 million commercial loan from the ICBC will be re-financed in the coming weeks,” said the sources.